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Peter Thiel, famous for making billions off Facebook, tells us he’s finally found “utopia” – New Zealand.Thiel has been investing heavily in the country.
He’s already made two noteworthy venture investments there in the space of a few months. In October 2010, he invested $3 million in online accounting firm Xero, which is based (and publicly traded) in New Zealand. Then he invested $4 million in Pacific fibre, an ambitious company that is building a fibre-optic cable from Australia to New Zealand to the US and is raising $300-400 million more to do so.
These investments aren’t just one-offs. Thiel has set up a local venture firm called Valar Ventures. Valar Ventures LP was registered in New Zealand in July 2009, more than a year before Thiel’s first known New Zealand investment, and is managed by Valar Capital Management LLC, based in San Francisco, according to official records. Valar Ventures LP’s offices are at prominent New Zealand law firm Bell Gully, which suggests it doesn’t have full time staff yet. Peter Thiel founded two other companies in New Zealand: Second Star Limited, where he is sole shareholder, and Silverarc Advisors.
The people associated with these New Zealand companies, all of them close associates of Thiel at his hedge fund Clarium Capital, show how serious Thiel is about New Zealand. Valar Capital Management is managed by Nathan Linn, VP of Finance at Clarium. On the boards of Thiel’s New Zealand companies are Matt Danzeisen, Principal at Clarium, James Fitzgerald, COO and General Counsel at Clarium, and Andrew McCormack, VP Corporate Development at Clarium and previously Thiel’s assistant at PayPal.
Thiel is nothing if not an ambitious, long-term thinker, so what’s the big picture here? What could the famously contrarian investor possibly see in a country of 4 million people whose economy is mostly based on agriculture and tourism?Here’s a thought: maybe Peter Thiel wants to turn New Zealand into the next Silicon Valley. Or maybe even the libertarian utopia of his dreams.
Investing in a huge undersea fibre optic cable is typically a safe, low-return investment, which isn’t the kind of investments Thiel goes after. But bringing high speed internet into New Zealand would be a first step to turning the country into a new Silicon Valley.
The name of Thiel’s firm Valar Ventures comes from J.R.R. Tolkien’s Lord of the Rings universe. Thiel is a huge Tolkien fan and the Lord of the Rings movies were filmed in New Zealand. In Tolkien’s legendarium, the Valar are deities who created the world of Middle-Earth (portrayed by New Zealand in the movies) and then descended on it to help nurture its infancy and development.
Reached about this idea, Thiel said: “New Zealand is already utopia. But Silicon Valley and New Zealand can learn a lot from each other, and we want to help make that happen.” So Thiel is clearly in it for the long run.
Thiel is very libertarian, and New Zealand already has some of the most free-market policies in the world. Thiel is also a donor to the Seasteading Institute, a foundation that wants to create libertarian self-sustaining colonies out at sea. A popular libertarian cause is the “Free State Project” to get tens of thousands of libertarians to emigrate to New Hampshire and take over the government democratically to reshape the state according to libertarian ideals.
Thiel has been frustrated at US policies and generally been bearish on the US economy. He believes that the world needs a new wave of radical innovation in fields like artificial intelligence and robotics to escape impending disaster and has seemed increasingly sceptical that the US, the world leader in innovation, can deliver that.
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So what are Thiel’s chances of turning New Zealand in a new tech mecca?We spoke with a tech entrepreneur who lived in New Zealand who said that the country has a lot of potential as a tech hub. When asked about the culture, the person said: “They’re a brand new country. 160 years old. They have no fear of innovation or failure.” They also mentioned the country’s relaxed, laid back atmosphere. Sounds a lot like Silicon Valley to us.
Less Californian: the government is very efficient and business-friendly. The immigration services will actually put a foreign entrepreneur in touch with potential investors — not something you can exactly say of the US’s byzantine immigration system, or most other countries’ for that matter. Utopia indeed.
New Zealand already has a handful of world-beating startups like Wine-Searcher.com, the world’s top wine search engine, which is based in Auckland. A quick survey of online jobs listings in New Zealand shows great demand for developers. So there’s definitely the inklings of something.
There’s a precedent in Israel, also a young, small, gorgeous “island” nation with an immigrant population that kick-started one of the world’s most vibrant tech industries.
After the financial crisis, the New Zealand government unveiled plans to turn New Zealand into an offshore financial hub: because of its location, the New Zealand markets are the first to open each day, which could give an edge to firms located there. This is something that could come in handy to Thiel’s hedge fund. Xero, the company Thiel invested in, was founded in 2006 and went public in 2007, so their stock market seems much less broken than the US’s.
Tech, high finance, small government — when you think about it, it makes perfect sense for Thiel. As big fans of rugby and startups, we think Thiel’s involvement in New Zealand is an awesome story. We can’t wait to see how it develops.