By Tiffany Hsu
8:30 AM PDT, June 20, 2012
Peter Thiel, a PayPal co-founder and early Facebook investor, is launching a $402-million venture capital fund focused on mid-stage companies dealing with major global problems.
He’s calling it Mithril Capital Management.
If that sounds familiar, it’s because mithril is also an unusual metal described in “The Lord of the Rings” and “The Hobbit,” the Middle-earth fantasy classics created by J.R.R. Tolkien.
The material, according to Tolkien, is malleable, beautiful and rare, stronger than steel while also weighing much less. Sounds like gold, just better and less volatile on Wall Street.
Thiel is looking for similar protean properties in the companies backed by his new San Francisco-based fund.
Portfolio businesses will have “moved beyond the traditional venture-backed stage and prefer to remain private as they mature,” Thiel said in a statement Wednesday.
The recent startups will focus on a variety of sectors including biotech, healthcare and more, fixing blights ranging from “resource scarcity to disease,” according to the statement.
“Mithril companies, if we're right, will foment changes that will seem inevitable after they happen," said co-founder Ajay Royan, who will serve as managing general partner.
Royan also has been managing director at global macro fund Clarium Capital, which Thiel helped launch along with early-stage investment firm Founders Fund.
The Mithril fund will seek companies with which it can have “long-term relationships … over those with odds for a quick exit,” according to Wednesday’s statement.
“Solving an intractable problem may require a decade of work, but a lifetime of vision," said Thiel, who will chair Mithril’s investment committee.
The venture capital industry has been squeezed lately, with an 18% decline in capital raised and a 9% drop in deals during the first quarter, according to Dow Jones VentureSource. Another measure had venture capital fundraising plunging 35%.
California remains a hotbed, easily outpacing other funding hubs such as Boston and New York. But even in the Golden State, the 297 deals that raised $2.9 billion represented a fall in both dollar and deal amount.
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