San Francisco venture firm The Founders Fund has raised $220 million (€153 million) for its first institutional fund, surpassing its initial target of $150 million.
The firm was founded in 2005 by three PayPal co-founders, Peter Thiel, Like Nosek and Ken Howery. The firm has since added a fourth managing partner: Sean Parker, who founded file sharing programme Napster and online address book Plaxo. Parker, 27, has been a somewhat controversial startup figure, rumoured to have been forced out of both Facebook and Plaxo.
Founders’ first fund closed on $50 million in July 2005. The capital came from the firm’s managing partners and “select outside investors”. One of its first investments was seed capital for Facebook, then a social networking website for college students.
The new fund will invest in 15 to 20 early stage internet companies. The firm’s current portfolio includes pharmaceutical database Collaborative Drug Discovery, online dating network Engage.com and genealogy-based social networking website Geni.
Founders’ investment thesis centers on the “alignment of interests between founders and their investors”, in part by offering Series FF stock to entrepreneurs. The stock can be converted to preferred stock during subsequent rounds of funding, allowing entrepreneurs to maintain more control over their company.
“The traditional venture capital model is broken,” Parker said in a statement. “By offering tools like the Series FF stock, we are creating a new model of investment and alignment of interests.”