Personally, I think that the part of this deal that stinks is that the Valar/NZVIF partnership only invested in TWO companies; the majority of funds were just used to buy Xero shares on the public market (yes, they were already listed on the NZX sharemarket by this point).
That's kind of like how Chinese investors could game the system and get permanent residency in Canada by "investing" the minimum amount of $1,000,000 into the Vancouver property market (a.k.a. buying a house). And as an added bonus, they'd leave the house empty, messing up the rental market and making it harder for Canadians to find somewhere to live.
I have absolutely nothing against residency in return for bona fide business investments, but there's gotta be some element of risk involved for the investor. Getting a sweetheart deal from the government and then investing in the public sharemarket is in no way a benefit to the country.
It'd be a very different story had Thiel actually continued to make investments in the local startup community after getting his citizenship. But it sure looks to me like he made a few "investments" for show, got his citizenship (without even setting foot in the country!) and then promptly put his NZ passport into his bug-out bag and moved on to other things.
Isn't this kind of the point? The NZ governments goal was to increase private investment, not make a return. They succeeded -- Thiel put $6.8m to work in NZ that he may not have otherwise.
Many countries do this. For example in the UK the British Business Bank will become an LP in a VC fund acting as a multiplier on capital raised.
You may not agree with the government's decision, but you can hardly blame Thiel for making use of it.
Thiel put the vast majority of this money towards buying Xero shares on the public sharemarket. Hard to call that a bold investment strategy. As if that wasn't low-risk enough, he then managed to buy these shares on 50% margin (that's the NZVIF portion) and double his potential profit AT NO ADDITIONAL RISK.
It appears that was the point. It's not like he sailed in and viciously took advantage of everyone. I suspect this is on HN for a very specific reason.
Is this terribly surprising? Public/Private partnerships usually do not pan out unless you have competent administrators ready to fight for the best deal on your orgs behalf.
I do wish we could eject people who actively want to destroy America from the country, but rather we seem to have endless tolerance for Peter Thiel (German) and Milo Yiannopoulos (British) to come here and spread hate speech, plot ways to recreate slavery, etc.
Interesting thing here is that is an example of why privatisation is bad (the people get scammed), but at the same time an example of government's administrative incompetence (which can be an argument for privatisation).
Personally, I'm tired of all this neoliberal bullshit and would rather just figure out a way to make our public institutions run extremely well.
Peter is much more complex but Milo is pretty transparently a professional troll. I'm sure he's overjoyed to get crazy protests at Berkeley and to get banned from Twitter. The more attention he gets the better it is for his brand. He intentionally picks targets that are the most likely to over-react and uses the most inflammatory language he can.
"Public/Private partnerships usually do not pan out unless you have competent administrators ready to fight for the best deal on your orgs behalf."
No - they fail 95% of the time because government administrators have no clue how to be running VC investment vehicles in the first place, which is why they have to hire people like Thiel.
I don't think it turned out so badly.
'Bad' would have meant all the companies went bust.
A public/private 'investment vehicle' that actually funds successful startups is a huge win - because it's rare.
Not to be too defensive of Thiel - but one could argue that it was Thiel's participation that made the fund successful.
Most of these government VC things fail badly, and it's one of the things that is way, way out of their competency.
It's possible that the structure of the org could have been done a little bit better, but then possibly it would have been hard to attract someone like him.
The governments goal was more along the lines of trying to spur entrepreneurial activity - they got that + a little bit of profit.
That they didn't get more is not a bad thing. In the vast majority of cases - they would have failed to spur activity - and lost a pile of money.
So, the situation should be characterized as a 'win' just not as good as people would have liked.
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[+] [-] kiwidrew|9 years ago|reply
That's kind of like how Chinese investors could game the system and get permanent residency in Canada by "investing" the minimum amount of $1,000,000 into the Vancouver property market (a.k.a. buying a house). And as an added bonus, they'd leave the house empty, messing up the rental market and making it harder for Canadians to find somewhere to live.
I have absolutely nothing against residency in return for bona fide business investments, but there's gotta be some element of risk involved for the investor. Getting a sweetheart deal from the government and then investing in the public sharemarket is in no way a benefit to the country.
It'd be a very different story had Thiel actually continued to make investments in the local startup community after getting his citizenship. But it sure looks to me like he made a few "investments" for show, got his citizenship (without even setting foot in the country!) and then promptly put his NZ passport into his bug-out bag and moved on to other things.
[+] [-] ag56|9 years ago|reply
Many countries do this. For example in the UK the British Business Bank will become an LP in a VC fund acting as a multiplier on capital raised.
You may not agree with the government's decision, but you can hardly blame Thiel for making use of it.
[+] [-] kiwidrew|9 years ago|reply
[+] [-] angry_napkin|9 years ago|reply
[+] [-] trome|9 years ago|reply
I do wish we could eject people who actively want to destroy America from the country, but rather we seem to have endless tolerance for Peter Thiel (German) and Milo Yiannopoulos (British) to come here and spread hate speech, plot ways to recreate slavery, etc.
[+] [-] cylinder|9 years ago|reply
Personally, I'm tired of all this neoliberal bullshit and would rather just figure out a way to make our public institutions run extremely well.
[+] [-] api|9 years ago|reply
I mean this has to be the trolliest trollmobile that has ever trolled: http://media.breitbart.com/media/2016/09/img_4893_1024-640x4...
People need to learn to not feed the troll. The worst possible thing you can do to Milo is ignore him.
[+] [-] joezydeco|9 years ago|reply
[+] [-] messick|9 years ago|reply
[+] [-] kevinpet|9 years ago|reply
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] deanpeterson|9 years ago|reply
[deleted]
[+] [-] edblarney|9 years ago|reply
No - they fail 95% of the time because government administrators have no clue how to be running VC investment vehicles in the first place, which is why they have to hire people like Thiel.
I don't think it turned out so badly.
'Bad' would have meant all the companies went bust.
A public/private 'investment vehicle' that actually funds successful startups is a huge win - because it's rare.
Not to be too defensive of Thiel - but one could argue that it was Thiel's participation that made the fund successful.
Most of these government VC things fail badly, and it's one of the things that is way, way out of their competency.
It's possible that the structure of the org could have been done a little bit better, but then possibly it would have been hard to attract someone like him.
The governments goal was more along the lines of trying to spur entrepreneurial activity - they got that + a little bit of profit.
That they didn't get more is not a bad thing. In the vast majority of cases - they would have failed to spur activity - and lost a pile of money.
So, the situation should be characterized as a 'win' just not as good as people would have liked.
[+] [-] deanpeterson|9 years ago|reply
[deleted]
[+] [-] sctb|9 years ago|reply