Peter Thiel Considers Strategies to Back Chinese Startups
(Bloomberg) -- Peter Thiel is considering strategies to invest in Chinese startups as U.S. venture capital firms seek a piece of the country’s fast growing technology sector, people familiar with the matter said.
The conservative billionaire is weighing different approaches for investment, including raising a fund directly or through a partnership, two of the people said, asking not to be identified as the details are private. Thiel has made regular visits to China for several years and has yet to crystallize his plan, the people said.
A spokesman for Thiel denied he was currently raising a fund or entering any partnerships.
Thiel, who has an estimated net worth of $3.3 billion, oversees a sprawling network of a half dozen venture firms that have been overwhelmingly concentrated in the U.S. His investments include everything from hit mobile quiz show HQ Trivia to data mining for the military through Palantir Technologies Inc. and building rockets with Space Exploration Technologies Inc.
Thiel’s interest in China comes amid escalating tensions between the world’s two largest economies. President Donald Trump, who the billionaire has supported, has announced tariffs on $50 billion of Chinese-made products and is threatening to impose tariffs on an additional $200 billion worth of goods.
Under the Trump administration, the U.S. has made it harder for Chinese investors to acquire or take major stakes in American companies. Yet that hasn’t stopped American venture capital firms including Sequoia Capital and Lightspeed Venture Partners from backing Chinese startups.
Thiel’s new interest in Chinese technology companies would represent an about face from a few years ago. In his book "Zero to One," Thiel trashed the notion of innovation in China.
“The easiest way for China to grow is to relentlessly copy what has already worked in the West. And that’s exactly what it’s doing,” he wrote.
Thiel is now seeing startups shift from duplicating Western companies to innovating on their own and he wants to own an early share of that, one of the people familiar said.
China has produced a vast number of private companies valued at more than a billion dollars, as startups from group-buying app Meituan-Dianping and news aggregator Toutiao tap into a massive domestic consumer market and create new innovations never seen before in the West.
Five years ago, the U.S. had nine of the world’s 20 most valuable Internet companies and China had just two, according to Mary Meeker, a partner of venture firm Kleiner Perkins Caufield & Byers. While there are now 11 American firms in that list, the number from China has surged to nine, Meeker said in the “Internet Trends Report 2018” in May.
Thiel, an early investor in Facebook Inc. and co-founder of PayPal Holdings Inc., has used his personal wealth to back a range of projects, including the construction of offshore cities and persuading college students to drop out of school and unleash their inner entrepreneur. Thiel also co-founded venture firms Founders Fund and Mithril Capital among others.
The billionaire is also becoming less enamored with San Francisco as he relocates his personal funds Thiel Capital and the Thiel Foundation to Los Angeles, Bloomberg reported in February. The billionaire has been critical of Silicon Valley as "mono-cultural" and "toxic."
©2018 Bloomberg L.P.