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81-542: Joseph Lonsdale (born 1982 or 1983) is an American entrepreneur and venture capitalist . He co-founded companies including Palantir Technologies , Addepar , and OpenGov , and co-founded and serves as the managing partner at the technology investment firm 8VC. Lonsdale began his career as an intern at PayPal , then worked as an early executive at Clarium Capital , a hedge fund run by Lonsdale's mentor, Peter Thiel . In 2004, he, Thiel, Alex Karp , Stephen Cohen , and Nathan Gettings co-founded Palantir Technologies,

162-720: A Fulbright Fellowship to study transparency and corruption in Mexico. Bookman served as a law clerk to the Honorable Sandra S. Ikuta on the U.S. Court of Appeals for the Ninth Circuit , later working as a trial litigator at Keker, Van Nest & Peters in San Francisco. Bookman served as Advisor to U.S. Army General H.R. McMaster (2011-2012), on the Combined Joint Interagency Task Force (Shafafiyat) at

243-509: A capitalist , is a person who makes capital investments in companies in exchange for an equity stake . The venture capitalist is often expected to bring managerial and technical expertise, as well as capital, to their investments. A venture capital fund refers to a pooled investment vehicle (in the United States, often an LP or LLC ) that primarily invests the financial capital of third-party investors in enterprises that are too risky for

324-418: A data mining and defense technology company. Lonsdale left Palantir in 2009 and co-founded Addepar , a wealth management technology company. Lonsdale co-founded the venture capital firm Formation 8 in 2011, and another called 8VC in 2015. Lonsdale has been outspoken about politics, and is an active Republican donor and fundraiser. He founded the conservative Cicero Institute think tank, and co-founded

405-573: A White House summit organized by Jared Kushner , the brother of Thrive Capital's founder. Bookman grew up in Cabin John, Maryland outside of Washington, D.C. In 2021 Bookman took a cross-country bike ride from the San Francisco Bay to the Chesapeake Bay to visit with local government leaders. In September 2019, Bookman joined an expedition with mountain guide Garrett Madison to attempt

486-646: A company which offers cloud-based software for government budgeting, in 2012. He was chairman of the board until 2024, when the company was acquired by Cox Enterprises . He also co-founded and serves on the boards of Affinity, Anduin, Epirus, Esper, Hearth, LIT, Resilience Bio, and Swiftscale Bio. In 2011, Lonsdale, Brian Koo, and Jim Kim co-founded the San Francisco-based venture capital firm Formation 8 , which focused on investing in technology companies based in Asia. Its first fund raised almost $ 450   million, and

567-491: A competitor. In 2015, shortly after the breakup of Formation 8, Lonsdale co-founded 8VC (originally called "8 Partners") with 15 of the 25 employees from Formation 8. 8VC has invested in Anduril , Hyperloop One , Synthego, and UBiome . Originally based in San Francisco, Lonsdale relocated the firm's headquarters to Austin , Texas in 2020, shortly after moving there with his family. Lonsdale has also been an angel investor . He

648-400: A consensual relationship in 2012, while the class was underway, but Clougherty alleged that he had been sexually abusive throughout. In June, Stanford found that he had broken the rule prohibiting relationships between mentors and mentees, and banned him from mentoring undergraduates at the university for ten years. Clougherty later underwent negotiations with Stanford and Lonsdale. She reached

729-459: A consequence, most venture capital investments are done in a pool format, where several investors combine their investments into one large fund that invests in many different startup companies. By investing in the pool format, the investors are spreading out their risk to many different investments instead of taking the chance of putting all of their money in one start up firm. Venture capital firms are typically structured as partnerships ,

810-646: A decade later in 1994. The advent of the World Wide Web in the early 1990s reinvigorated venture capital as investors saw companies with huge potential being formed. Netscape and Amazon (company) were founded in 1994, and Yahoo! in 1995. All were funded by venture capital. Internet IPOs—AOL in 1992; Netcom in 1994; UUNet, Spyglass and Netscape in 1995; Lycos, Excite, Yahoo!, CompuServe, Infoseek, C/NET, and E*Trade in 1996; and Amazon, ONSALE, Go2Net, N2K, NextLink, and SportsLine in 1997—generated enormous returns for their venture capital investors. These returns, and

891-573: A finance background. Venture capitalists with an operational background ( operating partner ) tend to be former founders or executives of companies similar to those which the partnership finances or will have served as management consultants. Venture capitalists with finance backgrounds tend to have investment banking or other corporate finance experience. Although the titles are not entirely uniform from firm to firm, other positions at venture capital firms include: The average maturity of most venture capital funds ranges from 10 years to 12 years, with

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972-437: A fund, the investors have a fixed commitment to the fund that is initially unfunded and subsequently "called down" by the venture capital fund over time as the fund makes its investments. There are substantial penalties for a limited partner (or investor) that fails to participate in a capital call . It can take anywhere from a month to several years for venture capitalists to raise money from limited partners for their fund. At

1053-418: A late season ascent of Mount Everest . The guide called off the attempt while the group was in base camp, which Madison described as a decision based on dangerous conditions. In March 2020, Bookman filed a lawsuit seeking damages over the non-refundable expedition fee, alleging the guide had canceled the trip for reasons unrelated to safety. In December 2021, the case was settled with Bookman agreeing through

1134-560: A predominantly libertarian and conservative editorial perspective. The Stanford Review was co-founded in 1987 by Peter Thiel , who would eventually became a mentor to Lonsdale. Lonsdale interned at the financial technology firm PayPal while at Stanford. Although he was never a founder or executive at the company, he's sometimes described as a part of the " PayPal Mafia " due to his close connections with members of that group, which includes Thiel, Max Levchin , Reid Hoffman , and David O. Sacks . He didn't know Thiel well while at PayPal, but

1215-578: A process known as "generating deal flow," where they reach out to their network to source potential investments. The study also reported that few VCs use any type of financial analytics when they assess deals; VCs are primarily concerned about the cash returned from the deal as a multiple of the cash invested. According to 95% of the VC firms surveyed, VCs cite the founder or founding team as the most important factor in their investment decision. Other factors are also considered, including intellectual property rights and

1296-803: A return of over 1200 times its investment and an annualized rate of return of 101% to ARDC. Former employees of ARDC went on to establish several prominent venture capital firms including Greylock Partners , founded in 1965 by Charlie Waite and Bill Elfers; Morgan, Holland Ventures, the predecessor of Flagship Ventures, founded in 1982 by James Morgan; Fidelity Ventures, now Volition Capital, founded in 1969 by Henry Hoagland; and Charles River Ventures , founded in 1970 by Richard Burnes. ARDC continued investing until 1971, when Doriot retired. In 1972 Doriot merged ARDC with Textron after having invested in over 150 companies. John Hay Whitney (1904–1982) and his partner Benno Schmidt (1913–1999) founded J.H. Whitney & Company in 1946. Whitney had been investing since

1377-411: A role in managing entrepreneurial companies at an early stage, thus adding skills as well as capital, thereby differentiating VC from buy-out private equity, which typically invest in companies with proven revenue, and thereby potentially realizing much higher rates of returns. Inherent in realizing abnormally high rates of returns is the risk of losing all of one's investment in a given startup company. As

1458-606: A segment of Silicon Valley into a rallying cry in the culture war ". In November 2020, Lonsdale announced that he was moving his family, 8VC, and the Cicero Institute from the Bay Area to Austin , Texas . In an opinion editorial published in The Wall Street Journal , he cited California's "bad policies [that] discourage business and innovation", worsening public safety, high taxes, and a deteriorating quality of life as

1539-425: A settlement with Stanford for an undisclosed amount, and Stanford banned Lonsdale from campus for ten years after reopening their previous investigation. Lonsdale also reportedly offered Clougherty a settlement, but she refused it after objecting to a blanket non-disclosure agreement . Lonsdale denied ever offering a settlement. In January 2015, Clougherty sued Lonsdale over the alleged sexual assault. Lonsdale denied

1620-402: A significant portion of the companies' ownership (and consequently value). Companies who have reached a market valuation of over $ 1 billion are referred to as Unicorns . As of May 2024 there were a reported total of 1248 Unicorn companies. Venture capitalists also often provide strategic advice to the company's executives on its business model and marketing strategies. Venture capital is also

1701-540: A stake in the company. Lonsdale co-founded Addepar , a wealth management and data analytics platform, in 2009 with Jason Mirra. The software is targeted towards financial advisers and the ultra-wealthy, and is intended to provide a clear view into complex financial portfolios, predict future risks, and help with reporting and transfers. Early investors in the company included Thiel and PayPal veteran David O. Sacks. In 2013, Lonsdale became chairman and left his role as CEO. Lonsdale and Zachary Bookman co-founded OpenGov ,

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1782-520: A successful exit within the required time frame (typically 8–12 years) that venture capitalists expect. Because investments are illiquid and require the extended time frame to harvest, venture capitalists are expected to carry out detailed due diligence prior to investment. Venture capitalists also are expected to nurture the companies in which they invest, in order to increase the likelihood of reaching an IPO stage when valuations are favourable. Venture capitalists typically assist at four stages in

1863-405: A template for state legislation that includes fines of up to $ 5,000 for repeatedly violating encampment bans and language to facilitate involuntary psychiatric commitments . As of August 2024, bills based on the template have been introduced in fifteen states and passed in eight. According to Rolling Stone , the Cicero Institute "helped transform homelessness policing from a niche fixation of

1944-523: A variant known as "Speed Venturing", which is akin to speed-dating for capital, where the investor decides within 10 minutes whether he wants a follow-up meeting. In addition, some new private online networks are emerging to provide additional opportunities for meeting investors. This need for high returns makes venture funding an expensive capital source for companies, and most suitable for businesses having large up-front capital requirements , which cannot be financed by cheaper alternatives such as debt. That

2025-424: A way in which the private and public sectors can construct an institution that systematically creates business networks for the new firms and industries so that they can progress and develop. This institution helps identify promising new firms and provide them with finance, technical expertise, mentoring , talent acquisition, strategic partnership, marketing "know-how", and business models . Once integrated into

2106-412: Is among the leaders of the super PAC, and was a major fundraiser for the committee in addition to making his own $ 1   million contribution. In May 2013, Lonsdale's ex-girlfriend, Elise "Ellie" Clougherty, reported to Stanford University that Lonsdale had sexually assaulted and harassed her while she was an undergraduate, while he was her mentor in a technology entrepreneurship class. The two had begun

2187-436: Is attractive for new companies with limited operating history that are too small to raise capital in the public markets and have not reached the point where they are able to secure a bank loan or complete a debt offering . In exchange for the high risk that venture capitalists assume by investing in smaller and early-stage companies, venture capitalists usually get significant control over company decisions, in addition to

2268-466: Is crucial for startups to kickstart their journey and attract further investment in subsequent funding rounds. Typical venture capital investments occur after an initial " seed funding " round. The first round of institutional venture capital to fund growth is called the Series A round . Venture capitalists provide this financing in the interest of generating a return through an eventual "exit" event, such as

2349-418: Is different. Venture capital funds are generally three in types: Some of the factors that influence VC decisions include: Within the venture capital industry, the general partners and other investment professionals of the venture capital firm are often referred to as "venture capitalists" or "VCs". Typical career backgrounds vary, but, broadly speaking, venture capitalists come from either an operational or

2430-414: Is most commonly the case for intangible assets such as software, and other intellectual property, whose value is unproven. In turn, this explains why venture capital is most prevalent in the fast-growing technology and life sciences or biotechnology fields. If a company does have the qualities venture capitalists seek including a solid business plan, a good management team, investment and passion from

2511-508: Is often credited with the introduction of the term "venture capitalist" that has since become widely accepted. During the 1960s and 1970s, venture capital firms focused their investment activity primarily on starting and expanding companies. More often than not, these companies were exploiting breakthroughs in electronic, medical, or data-processing technology. As a result, venture capital came to be almost synonymous with financing of technology ventures. An early West Coast venture capital company

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2592-412: Is substantially different from raising debt or a loan. Lenders have a legal right to interest on a loan and repayment of the capital irrespective of the success or failure of a business. Venture capital is invested in exchange for an equity stake in the business. The return of the venture capitalist as a shareholder depends on the growth and profitability of the business. This return is generally earned when

2673-561: The CIA via its In-Q-Tel venture fund, and many of its first customers were intelligence agencies. Since then, Palantir has sold access to its large shared databases and to its analysis and prediction software to government agencies, militaries, police departments, financial firms, healthcare and pharmaceutical companies, and others. Lonsdale made much of his fortune at Palantir, which was valued at $ 1   billion by 2010. Lonsdale left Palantir in 2009, though he continued to hold an advisory role and

2754-667: The Employee Retirement Income Security Act (ERISA) in 1974, corporate pension funds were prohibited from holding certain risky investments including many investments in privately held companies. In 1978, the US Labor Department relaxed certain restrictions of the ERISA, under the " prudent man rule " , thus allowing corporate pension funds to invest in the asset class and providing a major source of capital available to venture capitalists. The public successes of

2835-755: The International Security Assistance Force headquarters in Kabul, Afghanistan . Bookman helped lead a Rule of Law team on the task force that worked with the Afghan Department of Justice on corruption cases , such as the bribery scandal at the Dawood National Military Hospital. Bookman co-founded OpenGov in 2012 with Joe Lonsdale and Stanford University technologists. OpenGov received investments from Thrive Capital starting in 2013, and in 2017 Bookman participated in

2916-508: The LG and LS chaebols in South Korea. Those concerns were shared by Koo's father, John, whose LS Group had promised $ 50   million in early investment to Formation 8, and who chaired Formation 8's strategic advisory board. Lonsdale had grown concerned about Koo's investments in Asia, including his failed attempt to create a Korean presence for Wish that was ultimately viewed by Wish's CEO to be

2997-786: The Stanford Review while attending Stanford, and later worked at Palantir. They have four daughters and a son together. They moved from the Bay Area in California to Austin, Texas, in 2020. Venture capital Venture capital ( VC ) is a form of private equity financing provided by firms or funds to startup , early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in terms of number of employees, annual revenue, scale of operations, etc. Venture capital firms or funds invest in these early-stage companies in exchange for equity , or an ownership stake. Venture capitalists take on

3078-1027: The Wallenbergs , the Vanderbilts , the Whitneys , the Rockefellers , and the Warburgs were notable investors in private companies. In 1938, Laurance S. Rockefeller helped finance the creation of both Eastern Air Lines and Douglas Aircraft , and the Rockefeller family had vast holdings in a variety of companies. Eric M. Warburg founded E.M. Warburg & Co. in 1938, which would ultimately become Warburg Pincus , with investments in both leveraged buyouts and venture capital. The Wallenberg family started Investor AB in 1916 in Sweden and were early investors in several Swedish companies such as ABB , Atlas Copco , and Ericsson in

3159-779: The general partners of which serve as the managers of the firm and will serve as investment advisors to the venture capital funds raised. Venture capital firms in the United States may also be structured as limited liability companies , in which case the firm's managers are known as managing members. Investors in venture capital funds are known as limited partners . This constituency comprises both high-net-worth individuals and institutions with large amounts of available capital, such as state and private pension funds , university financial endowments , foundations, insurance companies, and pooled investment vehicles, called funds of funds . Venture capitalist firms differ in their motivations and approaches. There are multiple factors, and each firm

3240-722: The 1930s, founding Pioneer Pictures in 1933 and acquiring a 15% interest in Technicolor Corporation with his cousin Cornelius Vanderbilt Whitney . Florida Foods Corporation proved Whitney's most famous investment. The company developed an innovative method for delivering nutrition to American soldiers, later known as Minute Maid orange juice and was sold to The Coca-Cola Company in 1960. J.H. Whitney & Company continued to make investments in leveraged buyout transactions and raised $ 750 million for its sixth institutional private-equity fund in 2005. One of

3321-545: The allegations against him, and created a website containing a denial statement and excerpts of their correspondence. Lonsdale countersued Clougherty for defamation . In November 2015, Clougherty dropped her lawsuit, and Lonsdale dropped his countersuit. Stanford lifted its campus ban, with a spokesperson stating that "new evidence that came to light during litigation" had caused them to decide he had not violated campus policy. Julie Bort later wrote in Business Insider that

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3402-493: The amount of capital invested). Venture capital investors sought to reduce the size of commitments they had made to venture capital funds, and, in numerous instances, investors sought to unload existing commitments for cents on the dollar in the secondary market . By mid-2003, the venture capital industry had shriveled to about half its 2001 capacity. Nevertheless, PricewaterhouseCoopers' MoneyTree Survey shows that total venture capital investments held steady at 2003 levels through

3483-461: The business network, these firms are more likely to succeed, as they become "nodes" in the search networks for designing and building products in their domain. However, venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion of control, much like entrepreneurial decisions in general. Before World War II (1939–1945) venture capital was primarily the domain of wealthy individuals and families. J.P. Morgan ,

3564-632: The changing conditions, corporations that had sponsored in-house venture investment arms, including General Electric and Paine Webber either sold off or closed these venture capital units. Additionally, venture capital units within Chemical Bank and Continental Illinois National Bank , among others, began shifting their focus from funding early stage companies toward investments in more mature companies. Even industry founders J.H. Whitney & Company and Warburg Pincus began to transition toward leveraged buyouts and growth capital investments. By

3645-405: The company selling shares to the public for the first time in an initial public offering (IPO), or disposal of shares happening via a merger, via a sale to another entity such as a financial buyer in the private equity secondary market or via a sale to a trading company such as a competitor. In addition to angel investing , equity crowdfunding and other seed funding options, venture capital

3726-413: The company's development: Because there are no public exchanges listing their securities, private companies meet venture capital firms and other private-equity investors in several ways, including warm referrals from the investors' trusted sources and other business contacts; investor conferences and symposia; and summits where companies pitch directly to investor groups in face-to-face meetings, including

3807-506: The course of the decade. The growth of the industry was hampered by sharply declining returns, and certain venture firms began posting losses for the first time. In addition to the increased competition among firms, several other factors affected returns. The market for initial public offerings cooled in the mid-1980s before collapsing after the stock market crash in 1987, and foreign corporations, particularly from Japan and Korea , flooded early-stage companies with capital. In response to

3888-541: The emergence of the independent investment firms on Sand Hill Road , beginning with Kleiner Perkins and Sequoia Capital in 1972. Located in Menlo Park, California , Kleiner Perkins, Sequoia and later venture capital firms would have access to the many semiconductor companies based in the Santa Clara Valley as well as early computer firms using their devices and programming and service companies. Kleiner Perkins

3969-451: The end of the 1980s, venture capital returns were relatively low, particularly in comparison with their emerging leveraged buyout cousins, due in part to the competition for hot startups, excess supply of IPOs and the inexperience of many venture capital fund managers. Growth in the venture capital industry remained limited throughout the 1980s and the first half of the 1990s, increasing from $ 3 billion in 1983 to just over $ 4 billion more than

4050-506: The firm was described by Fortune as "the hottest new VC firm since Andreessen Horowitz ". The company went on to raise a second, $ 500   million fund in December 2014. Formation 8's portfolio included Color Genomics , Oculus VR , Oscar Health , Plated , RelateIQ , Wish , and Yello Mobile . Formation 8 abruptly shut down in November 2015, citing differences in investment styles between

4131-505: The first half of the 20th century. Only after 1945 did "true" venture capital investment firms begin to emerge, notably with the founding of American Research and Development Corporation (ARDC) and J.H. Whitney & Company in 1946. Georges Doriot , the "father of venture capitalism", along with Ralph Flanders and Karl Compton (former president of MIT ) founded ARDC in 1946 to encourage private-sector investment in businesses run by soldiers returning from World War II. ARDC became

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4212-407: The first institutional private-equity investment firm to raise capital from sources other than wealthy families. Unlike most present-day venture capital firms, ARDC was a publicly traded company. ARDC's most successful investment was its 1957 funding of Digital Equipment Corporation (DEC), which would later be valued at more than $ 355 million after its initial public offering in 1968. This represented

4293-539: The first steps toward a professionally managed venture capital industry was the passage of the Small Business Investment Act of 1958 . The 1958 Act officially allowed the U.S. Small Business Administration (SBA) to license private "Small Business Investment Companies" (SBICs) to help the financing and management of the small entrepreneurial businesses in the United States. The Small Business Investment Act of 1958 provided tax breaks that helped contribute to

4374-504: The founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital. There are multiple stages of venture financing offered in venture capital, that roughly correspond to these stages of a company's development. In early stage and growth stage financings, venture-backed companies may also seek to take venture debt . A venture capitalist or sometimes simply called

4455-406: The founders. Later reporting attributed the closure to interpersonal conflicts between Lonsdale and Koo, stemming from the public sexual assault allegation and lawsuit against Lonsdale, and a failed investment by Koo. Koo was angered that Lonsdale had not told him about the sexual assault allegations until the lawsuit, and was concerned about their impact on the reputation of his family, which controls

4536-420: The initial stages of funding for a startup company, typically occurring early in its development. During a seed round, entrepreneurs seek investment from angel investors , venture capital firms, or other sources to finance the initial operations and development of their business idea. Seed funding is often used to validate the concept, build a prototype, or conduct market research . This initial capital injection

4617-566: The internship helped Lonsdale get a job as an early executive at another of Thiel's companies, the hedge fund Clarium Capital . In 2004, Lonsdale began working on a prototype for the data mining and defense technology company Palantir Technologies , which he cofounded along with Thiel, Alex Karp , Stephen Cohen , and Nathan Gettings. The company aimed to apply the types of big data and data analytics techniques used for fraud detection at PayPal to national security, military, and law enforcement problems. Palantir received early investment from

4698-411: The investment professionals served as general partner and the investors, who were passive limited partners , put up the capital. The compensation structure, still in use today, also emerged with limited partners paying an annual management fee of 1.0–2.5% and a carried interest typically representing up to 20% of the profits of the partnership. The growth of the venture capital industry was fueled by

4779-541: The investors invest with equal terms; or (2) asymmetric —where different investors have different terms. Typically asymmetry is seen in cases where investors have opposing interests, such as the need to not have unrelated business taxable income in the case of public tax-exempt investors. The decision process to fund a company is elusive. One study report in the Harvard Business Review states that VCs rarely use standard financial analytics. First, VCs engage in

4860-412: The performance of the companies post-IPO, caused a rush of money into venture capital, increasing the number of venture capital funds raised from about 40 in 1991 to more than 400 in 2000, and the amount of money committed to the sector from $ 1.5 billion in 1991 to more than $ 90 billion in 2000. The bursting of the dot-com bubble in 2000 caused many venture capital firms to fail and financial results in

4941-638: The politics as it was about being contrarian. Hopefully, I'm slightly more mature now, but I've always relished standing out from the crowd, standing up and disagreeing with everyone. If I had grown up in Arkansas, I would have joined up with the left-wing club." In 2021, The Guardian described Lonsdale as "a regular critic of ' woke ' politics". Lonsdale founded the Cicero Institute conservative think tank in 2016, and he runs it along with his wife, Tayler. The group has pushed for criminalizing homelessness and rejecting Housing First policies. The group publishes

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5022-591: The possibility of a few years of extensions to allow for private companies still seeking liquidity. The investing cycle for most funds is generally three to five years, after which the focus is managing and making follow-on investments in an existing portfolio. This model was pioneered by successful funds in Silicon Valley through the 1980s to invest in technological trends broadly but only during their period of ascendance, and to cut exposure to management and marketing risks of any individual firm or its product. In such

5103-702: The primary factors in his decision. In the editorial and subsequent interviews, Lonsdale argued that the "intolerant far left" that ran California's government and were the loudest voices in Silicon Valley companies were the root cause of these problems. In 2023, Lonsdale, writer Bari Weiss , and others co-founded the University of Austin . Lonsdale and his collaborators described the school as dedicated to freedom of thought and discussion, and criticized academia for treating faculty "like thought criminals " and suppressing open inquiry among students. When asked why he created

5184-475: The private University of Austin . Lonsdale grew up in Fremont, California , with two brothers. His father was Irish Catholic , and he was raised Jewish by his mother. He has described his family as "very, very competitive". Lonsdale graduated from Stanford University in 2004 with a degree in computer science . From 2002–2003, he served as editor-in-chief of The Stanford Review , a student-run newspaper with

5265-478: The reporting on the allegations, which largely "vilified" him, had damaged his reputation. She also wrote that he had been "helped by the press" in the matter, by a longform article by Emily Bazelon for The New York Times "that depicted his ex as an emotionally fragile woman, him as an awkward bro-type, and their relationship as something that wasn't particularly good for either of them." In September 2016, Lonsdale married Tayler Cox. Tayler, like Lonsdale, edited

5346-467: The rise of private-equity firms. During the 1950s, putting a venture capital deal together may have required the help of two or three other organizations to complete the transaction. It was a business that was growing very rapidly, and as the business grew, the transactions grew exponentially. Arthur Rock , one of the pioneers of Silicon Valley during his venturing the Fairchild Semiconductor

5427-413: The risk of financing start-ups in the hopes that some of the companies they support will become successful. Because startups face high uncertainty, VC investments have high rates of failure. Start-ups are usually based on an innovative technology or business model and often come from high technology industries such as information technology (IT) or biotechnology . Pre-seed and seed rounds are

5508-494: The second quarter of 2005. Although the post-boom years represent just a small fraction of the peak levels of venture investment reached in 2000, they still represent an increase over the levels of investment from 1980 through 1995. As a percentage of GDP, venture investment was 0.058% in 1994, peaked at 1.087% (nearly 19 times the 1994 level) in 2000 and ranged from 0.164% to 0.182% in 2003 and 2004. The revival of an Internet -driven environment in 2004 through 2007 helped to revive

5589-462: The sector to decline. The Nasdaq crash and technology slump that started in March 2000 shook virtually the entire venture capital industry as valuations for startup technology companies collapsed. Over the next two years, many venture firms had been forced to write-off large proportions of their investments, and many funds were significantly " under water " (the values of the fund's investments were below

5670-487: The standard capital markets or bank loans . These funds are typically managed by a venture capital firm, which often employs individuals with technology backgrounds (scientists, researchers), business training and/or deep industry experience. A core skill within VCs is the ability to identify novel or disruptive technologies that have the potential to generate high commercial returns at an early stage. By definition, VCs also take

5751-654: The state of the economy. Some argue that the most important thing a VC looks for in a company is high-growth. Zachary Bookman Bookman holds a JD from the Yale Law School and an MPA from the Harvard Kennedy School . He graduated as valedictorian of his class from the University of Maryland and is an alumnus of the Sidwell Friends School in Washington, D.C. In 2007-2008, Bookman received

5832-517: The tech industry. Lonsdale is an active Republican political donor and fundraiser, and has been involved with the Koch network . In 2024, Lonsdale joined Douglas Leone , David O. Sacks, and other venture capitalists and tech executives in supporting Elon Musk's America PAC , a super PAC backing Donald Trump's 2024 presidential campaign . Lonsdale has been described as a friend and "political confidant" of Musk's. According to The New York Times , Lonsdale

5913-424: The time when all of the money has been raised, the fund is said to be closed and the 10-year lifetime begins. Some funds have partial closes when one half (or some other amount) of the fund has been raised. The vintage year generally refers to the year in which the fund was closed and may serve as a means to stratify VC funds for comparison. From an investor's point of view, funds can be: (1) traditional —where all

5994-650: The university, Lonsdale expressed that he felt that Ivy League universities and Stanford had been "conquered" by "radical, far-left ideologues", and that people could no longer become professors or Ph.D. students at such institutions unless they acquiesced to the "woke mind virus". The University of Austin promised "Forbidden Courses" involving topics including science, religion, race, gender politics, and conservatism, with lecturers including prominent tech founders and venture capitalists like Marc Andreessen , Antonio García Martínez , and others. The school raised $ 150   million, much of it from venture capitalists and those in

6075-652: The venture capital environment. However, as a percentage of the overall private-equity market, venture capital has still not reached its mid-1990s level, let alone its peak in 2000. Venture capital funds, which were responsible for much of the fundraising volume in 2000 (the height of the dot-com bubble ), raised only $ 25.1 billion in 2006, a 2% decline from 2005 and a significant decline from its peak. The decline continued till their fortunes started to turn around in 2010 with $ 21.8 billion invested (not raised). The industry continued to show phenomenal growth and in 2020 hit $ 80 billion in fresh capital. Obtaining venture capital

6156-466: The venture capital industry in the 1970s and early 1980s (e.g., Digital Equipment Corporation , Apple Inc. , Genentech ) gave rise to a major proliferation of venture capital investment firms. From just a few dozen firms at the start of the decade, there were over 650 firms by the end of the 1980s, each searching for the next major "home run". The number of firms multiplied, and the capital managed by these firms increased from $ 3 billion to $ 31 billion over

6237-544: The venture capitalist "exits" by selling its shareholdings when the business is sold to another owner. Venture capitalists are typically very selective in deciding what to invest in, with a Stanford survey of venture capitalists revealing that 100 companies were considered for every company receiving financing. Ventures receiving financing must demonstrate an excellent management team, a large potential market, and most importantly high growth potential, as only such opportunities are likely capable of providing financial returns and

6318-516: Was Draper and Johnson Investment Company, formed in 1962 by William Henry Draper III and Franklin P. Johnson, Jr. In 1965, Sutter Hill Ventures acquired the portfolio of Draper and Johnson as a founding action. Bill Draper and Paul Wythes were the founders, and Pitch Johnson formed Asset Management Company at that time. It was also in the 1960s that the common form of private-equity fund , still in use today, emerged. Private-equity firms organized limited partnerships to hold investments in which

6399-505: Was included in Forbes' " 30 Under 30" list in 2012, "Richest Entrepreneurs Under 40" in 2016, and " Midas List " in 2021 (later dropping off the list in 2022). Lonsdale was described as "lean[ing] right " and a "politically conservative contrarian " in Business Insider in 2017. At Stanford, he joined other right- and libertarian-leaning students at the Stanford Review . Speaking later about this decision, he said: "It's not as much about

6480-535: Was the first venture capital firm to open an office on Sand Hill Road in 1972. Throughout the 1970s, a group of private-equity firms, focused primarily on venture capital investments, would be founded that would become the model for later leveraged buyout and venture capital investment firms. In 1973, with the number of new venture capital firms increasing, leading venture capitalists formed the National Venture Capital Association (NVCA). The NVCA

6561-401: Was to serve as the industry trade group for the venture capital industry. Venture capital firms suffered a temporary downturn in 1974, when the stock market crashed and investors were naturally wary of this new kind of investment fund. It was not until 1978 that venture capital experienced its first major fundraising year, as the industry raised approximately $ 750 million. With the passage of

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