US billionaire Peter Thiel winds down NZ business interests, deregisters Valar Ventures

Peter Thiel, seen here at a Bitcoin conference in 2022, is winding down his exposure to New Zealand business.

American billionaire and surprise Kiwi Peter Thiel has further wound down his business connections to New Zealand — despite once claiming he would turbocharge our tech sector and that he “found no other country that aligns more with my view of the future than New Zealand” — with the shuttering of companies used in one of the country’s most one-sided investment plays.

Filings to the Companies Office this month flagged applications to deregister limited partnership Valar Ventures and its related company Valar NZ. Letters provided by Inland Revenue indicated the taxman raised no objections.

Questions sent by the Herald to Thiel’s representatives about the last rites being conducted over his New Zealand business presence went unanswered.

The move appears to leave Thiel’s only remaining connection to New Zealand being a passport, a small stake in formerly Wellington-based (but now San Francisco-headquartered) audiobook production outfit Booktrack, and a 193-hectare block of farmland on the shores of Lake Wānaka.

That property, acquired by Thiel in 2015 for $13.5 million, remains undeveloped after long-contested plans to build a partially underground lodge and meditation retreat were declined by Queenstown Lakes District Council, a decision last year upheld on appeal to the Environment Court.

Valar Ventures, founded in 2010, was the vehicle used by Thiel to make his initial play into Xero, which was listed on the New Zealand stock exchange in June 2007. He started buying into the company when shares were languishing at about $1 but they subsequently soared to more than $90.

The limited partnership — and its Xero shares — later formed Thiel’s contribution to an infamous partnership with the taxpayer-funded New Zealand Venture Investment Fund (NZVIF) that saw the billionaire and a handful of local rich-list partners secure a $33m payday.

The joint fund included a clause — present in earlier NZVIF projects but rarely used — allowing private investors to buy out their public partners for the cost of capital. The clause effectively halved the cost to private investors of any downsides, while allowing them to keep all profits if a fund was successful.

A source close to Valar said Thiel’s New York-based representatives on Valar, James Fitzgerald and Andrew McCormack, were initially suspicious of the NZVIF offer and could not believe such terms could be being offered.

Local startup Forrest Gump Rowan Simpson, who turned his early stories working in Trade Me and Vend into recent a book How To Be Wrong, touched on the deal in a recent essay: “There are no deep lessons from this. We offered a US billionaire a deal that was too good to be true. We can’t be too surprised he took it,” Simpson wrote.

Simpson was also critical of the NZVIF-Valar deal for allowing previous Xero share purchases, now listed on the ASX, to be “backed into” a scheme initially intended to support startups, and being offered on more attractive terms than offered to previous, largely New Zealand-based, investors.

A 2017 Herald investigation that broke news of the citizenship, and later revealed Valar had quietly activated the buyback in 2015, estimated Thiel’s personal returns from the NZVIF clause to be at least $23m.

Cabinet documents released in 2019 quantified gains for private investors from the buyout of $33m — with Thiel’s stake accounting for an overwhelming majority (75%) of private shareholders.

The Government subsequently banned the buy-back clause from inclusion in any future NZVIF deals.

Valar Ventures was also prominently cited in Thiel’s 2011 application for New Zealand citizenship, an eyebrow-raising play that required then-minister Nathan Guy to exercise ministerial discretion as the “extraordinary” applicant fell somewhat short of residency requirements and had only spent 12 days in the country in the prior five years.

The typical requirement for automatically conferred citizenship was 1350 days.

Valar Ventures’ website said in 2011: “Valar Ventures was founded to help grow New Zealand into a hub of technological prowess.”

Within less than a year it had considerably broadened its focus and was now seeking to invest with “entrepreneurs outside of the United States with groundbreaking ideas and the determination to see them to reality”.

Now, based in the United States, Valar Ventures continues but says it invests in “high-margin, fast-growing financial technology companies across the globe”.

Valar had also in 2014 led a US$20m ($34.7m) Series B funding round for retail software company Vend. Valar exited that investment once Vend was acquired in 2021 by US-based Lightspeed for US$350m.

In 2021 Founders Fund, a venture capital firm co-founded by Thiel in 2005, also took a small stake in Kiwi medtech startup HeartLab.

In the decade-and-a-half since being granted New Zealand citizenship Thiel has emerged as a key Silicon Valley backer for Donald Trump, founded intelligence and data analytics firm Palantir, which has the US Defence sector as its largest client, and backed a range of conservative and libertarian causes.

He was also reported in 2022 to be seeking a fourth passport (having German citizenship from birth, and naturalising in the United States) during several trips to the Mediterranean tax haven Malta.

Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the previous decade reporting from business newspapers and national magazines.