Founders Fund

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LLM Summary:Founders Fund is a $17B contrarian VC firm that has backed major AI companies like OpenAI and DeepMind but shows no explicit focus on AI safety or alignment research, instead emphasizing rapid capability development and transformative technologies. The firm has achieved exceptional returns through concentrated bets on companies like SpaceX and Palantir, though it faces controversies around conflicts of interest and its role in the Silicon Valley Bank crisis.

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QualityRated 50 but structure suggests 87 (underrated by 37 points)

Quick Assessment

Aspect	Rating	Notes
Investment Focus	High	AI, aerospace, biotech, defense, deep tech
Assets Under Management	$17B	As of 2025
Investment Philosophy	Contrarian	”Flying cars, not 140 characters”
Notable Successes	Exceptional	SpaceX ($18.2B position), Palantir (18.5x), Facebook
AI Safety Focus	Low	No explicit safety/alignment investments
Stage Focus	All stages	Seed to late-stage growth ($500K-$50M+ checks)
Controversies	Moderate	SVB bank run, conflicts of interest

Key Links

Source	Link
Official Website	foundersfund.com
Wikipedia	en.wikipedia.org

Overview

Founders Fund is a San Francisco-based venture capital firm founded in 2005 by Peter Thiel, Ken Howery, and Luke Nosek, all former PayPal executives.¹ The firm manages approximately $17 billion in assets and has backed some of the most influential technology companies of the past two decades, including SpaceX, Palantir Technologies, Facebook (as an early investor), OpenAI, Stripe, Airbnb, and Neuralink.²

Founders Fund distinguishes itself through a contrarian investment philosophy that prioritizes “transformational technologies” over incremental innovations, famously articulated in their motto about funding “flying cars, not 140 characters.”³ The firm provides maximum support with minimum interference to founder-led companies, operating under a radical promise to never remove entrepreneurs from their own companies.⁴ This founder-centric approach, combined with stage-agnostic investments ranging from $500,000 to $50 million+, has enabled the firm to achieve extraordinary returns, including a 26.6x return on one fund and an 18.5x multiple on their Palantir investment.⁵

The firm’s investment focus spans AI, aerospace, biotechnology, deep tech, defense, energy, and healthcare, guided by Peter Thiel’s contrarian philosophy drawing on René Girard’s theories of mimetic desire to avoid overcrowded market trends.⁶ Despite backing major AI companies like OpenAI and DeepMind, Founders Fund shows no explicit focus on AI safety or alignment research.⁷

History

Founding and Early Years

Founders Fund emerged from discussions among PayPal alumni in early 2005, when Peter Thiel, Ken Howery, and Luke Nosek organized the firm with a focus on backing ambitious science and technology companies solving difficult problems.⁸ The firm raised its first fund of $50 million in January 2005 from individual entrepreneurs and angel investors, positioning itself as the first institutional investor in both SpaceX and Palantir.⁹

Sean Parker, Napster co-founder and early Facebook president, joined as a partner in 2006, strengthening the firm’s connections to revolutionary technology ventures.¹⁰ The firm expanded rapidly, raising a second fund of $220 million in 2007 and a third fund of $250 million in 2010.¹¹

Fund Growth and Evolution

The firm’s fundraising trajectory reflects its growing influence and strong returns:

Year	Fund	Size	Aggregate AUM
2011	Fourth flagship	$625M	>$2B by 2014
2014	Fifth suite	$1B	>$2B
2016	Sixth flagship	$1.3B	>$3B
2020	Seventh flagship + first growth	$3B	>$6B
2022	Eighth flagship + second growth	$5B+	>$11B
2025	Growth III	$4.6B	≈$17B

The 2011 fourth fund achieved particularly impressive performance with nearly 14x returns.¹² Between 2020 and 2022, the firm returned $10 billion in shares to limited partners via public markets, demonstrating exceptional liquidity management.¹³

Strategic Shifts

Founders Fund evolved from early-stage consumer internet investments (Spotify, Lyft) to a broader strategy encompassing both early and late-stage opportunities.¹⁴ Post-Facebook success, the firm pivoted toward hard technology investments in aerospace, defense, AI, and biotechnology, deliberately avoiding the social media gold rush influenced by René Girard’s theories on mimetic desire.¹⁵

In 2019, the firm launched its first dedicated late-stage fund, signaling increased focus on growth investments.¹⁶ This strategy culminated in September 2025 when partners announced at the annual meeting that their third growth fund would invest approximately $460 million per company across 10 portfolio companies, compared to $225 million across 15 companies in the second fund and $55 million across 31 companies in the first fund.¹⁷ This shift toward concentrated, large-scale bets reflects confidence in backing fewer, higher-conviction opportunities.

In 2023, Peter Thiel directed the firm to slash its eighth flagship fund from $1.8 billion to $900 million amid market uncertainty, implementing what he called a venture capital “slimdown” despite internal resistance.¹⁸ The firm opened a Miami office in 2022 led by general partner Keith Rabois, expanding beyond its San Francisco headquarters.¹⁹

Investment Philosophy

Contrarian Foundation

Founders Fund’s investment approach centers on deliberately avoiding consensus market trends. Drawing on philosopher René Girard’s theories of mimetic desire, Peter Thiel led the firm to pivot away from social media investments after Facebook’s success, instead focusing on hard technology that other VCs were neglecting.²⁰ This philosophy is captured in the firm’s 2017 manifesto “What Happened to the Future?”, which criticizes the venture capital industry’s shift from “transformational technologies” to “cynical, incrementalist investments.”²¹

The firm’s decision-making process reflects this contrarian approach through rapid evaluation of opportunities—sometimes within days—with the full partnership involved in core bets rather than delegating to individual partners.²² For deals over $10 million, Peter Thiel holds veto power alongside two other directors, concentrating decision-making authority around key strategic choices.²³

Founder-Centric Strategy

Founders Fund launched with a radical promise that fundamentally differentiates it from traditional venture capital: the firm would never remove entrepreneurs from their own companies.²⁴ This founder-friendly approach provides maximum support with minimum interference, prioritizing the founder’s ambition and vision over specific sector focuses or stage constraints.²⁵

The firm’s partners often have firsthand founding experience, being founders or early employees at companies like PayPal, Palantir, Anduril, and SpaceX.²⁶ This shared background creates alignment with portfolio company founders and informs the firm’s operational philosophy.

Investment Criteria and Focus

Rather than constraining investments by traditional sector or stage boundaries, Founders Fund evaluates opportunities based on their potential for transformative impact. The firm invests across all stages from seed through late-stage growth, with check sizes ranging from $500,000 to over $50 million.²⁷ Primary sectors include:

AI and Deep Tech: Investments in OpenAI, DeepMind, and other AI infrastructure companies
Aerospace: First institutional investor in SpaceX, with position valued at $18.2 billion²⁸
Biotechnology and Healthcare: Focus on transformative medical technologies
Defense: Major investments in Palantir and Anduril, reflecting emphasis on dual-use technologies
Enterprise and Infrastructure: Backing companies building foundational technology layers

Geographic focus remains primarily on the United States, though the firm remains open to global opportunities.²⁹

Operational Approach

The firm operates with approximately 35 team members, with roughly one-third focused on investing activities.³⁰ This lean structure enables rapid decision-making while maintaining deep involvement in portfolio companies. Founders Fund has occasionally taken an incubation role, helping to start companies like Palantir and Anduril, though this is opportunistic rather than core to their model.³¹

The firm hosts “Hereticon,” described as a “conference for thoughtcrime,” covering controversial topics like genetic modification, AI, defense, and longevity, emphasizing dissent and progress through what they term “persecuted weirdos.”³² This event reflects the firm’s broader cultural stance favoring contrarian thinking and challenging mainstream technology discourse.

Notable Investments and Performance

Flagship Successes

Founders Fund’s track record includes some of venture capital’s most successful investments:

SpaceX: As the first institutional investor in SpaceX, Founders Fund’s position has grown to a valuation of $18.2 billion, representing the firm’s greatest investment success.³³ The firm has participated in multiple funding rounds since 2008, maintaining conviction through SpaceX’s long development cycles.³⁴

Palantir Technologies: The firm incubated Palantir alongside Peter Thiel’s involvement as chairman, achieving an 18.5x multiple and distributing $3.1 billion to investors.³⁵

Facebook: Peter Thiel’s personal $500,000 early investment in Facebook, made when he was establishing Founders Fund’s strategy, returned approximately $1 billion, though this predated the firm’s formal investment.³⁶

Anduril: In 2025, Founders Fund led what became its largest single check ever—approximately $1 billion as part of Anduril’s Series G round at a $28 billion valuation.³⁷ This investment has reportedly quintupled in value.³⁸

Other Notable Portfolio Companies: Stripe, Airbnb, Lyft, Neuralink, Figma, Rippling, and numerous other influential technology companies.³⁹

Fund Performance

The firm’s funds have delivered exceptional returns:

One fund achieved a 26.6x return on $227 million in committed capital⁴⁰
The 2011 fourth fund ($625 million) achieved nearly 14x returns⁴¹
Between 2020 and 2022, the firm returned $10 billion to limited partners through public market exits⁴²

These returns place Founders Fund among the top-performing venture capital firms globally, competing with established firms like Sequoia Capital and Andreessen Horowitz.⁴³

Cryptocurrency Investments

Founders Fund made its first Bitcoin investment in 2014, demonstrating early conviction in cryptocurrency.⁴⁴ As of recent filings, the firm holds approximately $1.58 billion in Bitcoin value (from $294 million invested) and $213 million in Ethereum (from $202 million invested), representing substantial unrealized gains.⁴⁵ The firm holds roughly two-thirds of its cryptocurrency position in Bitcoin, with additional blockchain equity investments.⁴⁶

Recent Investment Activity

In 2025-2026, notable investments include:

Anduril Series G: ≈$1 billion investment at $28 billion valuation (2024-2025)⁴⁷
Avalanche Energy: Participation in $29 million round following plasma physics breakthroughs (February 2026)⁴⁸
Neuralink Series E: $600 million round (May 2025)⁴⁹
Merge Labs: Seed round (January 14, 2026)⁵⁰

The firm maintains an active investment pace of approximately 17 investments per year, with total portfolio exceeding 950 investments.⁵¹

AI Investments and Safety Positioning

AI Portfolio Companies

Founders Fund has invested in several prominent AI companies, emphasizing transformative potential over safety-specific applications:

OpenAI: Early investor in the organization, which states its mission as creating “safe and powerful AI that benefits all of humanity”⁵²
DeepMind: Invested in this AI research leader before its acquisition by Google⁵³
Cognition: AI company in current portfolio⁵⁴
Scale: AI data infrastructure firm supporting model training⁵⁵

Additional defense-related AI investments include Arceo.ai (cybersecurity), which raised a $37 million round led by Founders Fund in 2019 and a $100 million Series D in 2023.⁵⁶

Absence of AI Safety Focus

Despite backing major AI capability companies, Founders Fund shows no explicit investments, public statements, or initiatives focused on AI safety, alignment research, or existential risk mitigation.⁵⁷ The firm’s portfolio does not include investments in safety-focused organizations like Anthropic, Redwood Research, or alignment-focused startups.⁵⁸

This positioning aligns with the firm’s broader emphasis on transformative technologies and rapid capability development rather than precautionary approaches. Peter Thiel’s defense technology focus through companies like Palantir and Anduril reflects strategic and commercial priorities rather than safety-oriented considerations.⁵⁹

The firm’s 2017 manifesto and Hereticon events have critiqued what they term “celebrity safetyists” who fear technology risks, emphasizing progress through bold development over caution.⁶⁰ This philosophical stance suggests limited interest in alignment or safety research that might slow AI capability development.

Controversies and Criticisms

Silicon Valley Bank Crisis

In March 2023, Founders Fund faced intense criticism for its role in triggering a bank run on Silicon Valley Bank (SVB).⁶¹ On Thursday morning, senior operations executives at the firm swiftly transferred assets to larger banks and advised portfolio companies to withdraw funds from SVB.⁶² This guidance circulated rapidly through media reports, and other venture capital firms including Coatue Management, Union Square Ventures, and Founder Collective followed suit.⁶³

The resulting withdrawals totaled $42 billion, and some venture capitalists accused Founders Fund and Peter Thiel specifically of deliberately triggering the crisis, possibly as retribution for unresolved conflicts.⁶⁴ Founders Fund responded by stating it acted according to fiduciary responsibilities to safeguard investments.⁶⁵ The incident highlighted the concentrated power of major venture capital firms to influence financial stability through coordinated actions.

Conflicts of Interest

Meta Board Overlap: Peter Thiel’s position on Meta’s board created multiple conflicts with Founders Fund investments. The firm invested $10 million in Boldend, a San Diego-based cyberwarfare company competing with NSO Group’s Pegasus, whose tools could reportedly hack Meta-owned WhatsApp—raising concerns about Thiel simultaneously serving Meta’s interests while backing a company that could compromise its platform.⁶⁶

Similarly problematic was Founders Fund’s investment in Clearview AI, which collected billions of photos from Facebook, Instagram, and other social platforms in direct violation of their terms of service, again while Thiel held a Meta board seat.⁶⁷ Meta declined to comment on these arrangements.⁶⁸

Rivalry with Mithril Capital: Founders Fund has engaged in longstanding competition with Mithril Capital, another Thiel-affiliated firm. In 2013, Founders Fund overrode Mithril’s early Airbnb deal (Series C) by leveraging Thiel’s prior backing, with Thiel later compensating Mithril through a Palantir investment.⁶⁹ This rivalry has been fueled by proximity disputes near the Presidio campus in San Francisco.⁷⁰

Ethical and Regulatory Concerns

The firm attracted criticism in 2025 for political connections when the General Services Administration considered it for government contracts.⁷¹ Additionally, Founders Fund was criticized for violating ethical norms and FDA rules through involvement with a vaccine company that used a live virus on 17 people who already had herpes, with supporters arguing regulatory processes were too burdensome.⁷²

Peter Thiel personally faced controversy for secretly funding Hulk Hogan’s $10 million lawsuit against Gawker Media in 2012, which drove the online media company into bankruptcy.⁷³ This action, while legally successful, raised questions about the use of wealth to suppress media organizations.

Mithril Capital, a related fund in Thiel’s investment ecosystem, faced serious allegations in 2019 when former counsel Crystal McKellar alleged that founder Ajay Royan had misled investors and artificially inflated performance numbers.⁷⁴ McKellar claimed wrongful termination for reporting these issues, and the FBI subsequently investigated Mithril, though no public charges were brought.⁷⁵

Internal Governance Concerns

Peter Thiel’s dominant influence within Founders Fund creates governance dynamics that may bias decision-making. He surrounds himself with loyal partners like Keith Rabois, Sean Parker, Max Marmer, and Trae Stephens, and holds veto power on deals over $10 million alongside two other directors.⁷⁶ This concentration of authority, while enabling rapid decisions, may limit diverse perspectives on controversial investments.

The 2023 decision to slash the eighth flagship fund from $1.8 billion to $900 million, driven by Thiel’s view of necessary venture capital “slimdown,” faced internal resistance but proceeded regardless.⁷⁷ Ryan Petersen, Flexport CEO who became a partner in 2023, had previously expressed regret in 2016 over Founders Fund’s investment in his company due to Thiel’s Trump support, illustrating tension between political associations and business relationships.⁷⁸

Key People

Founders and Core Partners

Peter Thiel (Co-founder, Partner): Born October 11, 1967, in Frankfurt, West Germany. Stanford philosophy graduate (A.B.) and Stanford Law School J.D.⁷⁹ Co-founded PayPal (originally Confinity) in 1998, serving as CEO and chairman until eBay’s $1.5 billion acquisition in 2002.⁸⁰ First outside investor in Facebook (2004).⁸¹ Co-founded Palantir Technologies (2003), serving as chairman.⁸² Founded Clarium Capital Management (2002), a global macro hedge fund.⁸³ Established Thiel Capital (2011) as family office incubating Founders Fund, Mithril Capital, Valar Ventures, Thiel Fellowship, and Breakout Labs.⁸⁴ Author of Zero to One (2014), a #1 New York Times bestseller.⁸⁵

Ken Howery (Co-founder): PayPal alumnus who co-founded Founders Fund with Thiel and Nosek in 2005.⁸⁶

Luke Nosek (Co-founder): PayPal alumnus and founding partner.⁸⁷

Sean Parker (Partner): Napster co-founder and early Facebook president who joined Founders Fund in 2006, bringing expertise in consumer internet platforms.⁸⁸

Current Leadership

Keith Rabois (General Partner): Leads Miami office opened in 2022, expanding Founders Fund’s geographic presence.⁸⁹

Lauren Gross and Brian Singerman (Longtime Partners): Key figures in fund strategy discussions; discussed the firm’s non-thematic approach and cryptocurrency investments, including the first Bitcoin investment in 2014.⁹⁰

Other Partners and Principals: Delian Asparouhov, Matias Van Thienen (promoted to partner), Napoleon Ta (web3 focus), Joey Krug, Jennifer Campbell, Sean Liu, Amin Mirzadegan.⁹¹

Operational Team

Erin Gleason Lane (Chief Communications Officer), Michael Solana (CMO), Neil Ruthven (CFO), with legal counsel including Cooley team members John Dado, Jimmy Matteucci, and Eric Doherty advising on major fund closings.⁹²

Key Uncertainties

AI Safety Positioning: While Founders Fund has invested in major AI capability companies like OpenAI and DeepMind, the firm’s stance on AI safety, alignment research, and existential risk mitigation remains unclear. No public statements or explicit safety-focused investments have been identified, leaving open questions about whether the firm views these concerns as important or whether its contrarian philosophy extends to skepticism about AI risks.

Conflict Management: The extent to which Founders Fund has implemented internal controls to manage conflicts of interest—particularly regarding Peter Thiel’s board positions and competing portfolio companies—remains opaque. While some conflicts have been publicly documented, the full scope of potential conflicts and mitigation measures is not publicly disclosed.

Fund Performance Sustainability: While historical returns have been exceptional (26.6x on one fund, 18.5x on Palantir), the shift toward larger, concentrated late-stage bets ($460 million per company in Growth III) represents a significant strategic change. Whether this approach can generate comparable returns at larger scale remains to be proven, particularly as the firm moves beyond early-stage opportunities that historically drove outsized multiples.

Decision-Making Dynamics: Peter Thiel’s veto power over deals above $10 million and his influence in surrounding himself with loyal partners raises questions about groupthink risks and whether contrarian perspectives within the partnership can effectively challenge investment decisions. The extent of internal debate and diversity of viewpoints on controversial investments is not publicly documented.

Late-Stage Strategy: The firm’s evolution from early-stage focus to concentrated late-stage growth investments represents a fundamental shift in strategy. The decision to invest $1 billion in Anduril’s Series G and pursue similar large checks differs substantially from the early SpaceX and Palantir investments that built the firm’s reputation. Whether this approach can identify transformative companies at later stages—or whether it simply reflects deployment of accumulated capital—remains uncertain.

Political Influence and Exposure: Peter Thiel’s political activities, including donations to political campaigns and proximity to government figures, create uncertain exposure for portfolio companies. The extent to which political associations influence investment decisions, portfolio company opportunities, or regulatory treatment is difficult to assess from public information.