Thiel’s Fund Said to Raise Up to $600 Million to Invest in Next Facebooks

By Ari Levy - Nov 9, 2011 4:59 AM GMT+0700

Founders Fund, the venture capital firm started by Facebook Inc. investor Peter Thiel, is raising as much as $600 million for its fourth fund, according to two people familiar with the matter.

The San Francisco-based firm aims to close the fund this month and will use the capital to invest in early-stage technology companies and more mature startups, said the people, who declined to be named because the fundraising is private.

Founders Fund is trying to bring in more than double the amount it did for its third fund last year, a $250 million pool focused on the Internet, science and engineering. The firm is raising money following the slowest quarter for venture capital fundraising in eight years. Venture firms raised $1.72 billion in the third quarter, down 53 percent from the same period a year earlier, according to the National Venture Capital Association.

Founders Fund didn’t immediately respond to an e-mailed request for comment.

Thiel, 44, co-founded PayPal Inc. and served as chief executive officer until the company was bought by EBay Inc. (EBAY) for $1.5 billion in 2002. He used his fortune to start hedge fund Clarium Capital Management and to invest in startups, including putting the first outside money in Facebook in 2004.

Spotify, Yammer

Along with his firm’s co-founders, Ken Howery and Luke Nosek, Thiel raised the first capital for Founders Fund in 2005 and the second fund in 2007.

Other Founders Fund investments include Spotify Ltd., Europe’s largest legal online music site; Yammer Inc., a social- networking service for businesses; and Quantcast Corp., which measures audience traffic on websites. The firm also invested in Elon Musk’s Space Exploration Technologies Corp., or SpaceX, which is building rockets to carry satellites into space and supply the International Space Station.

After a slowdown last quarter, venture fundraising may be picking up. Kleiner Perkins Caufield & Byers said in a U.S. Securities and Exchange filing last week that it’s seeking $250 million for a China fund. TriplePoint Capital, a provider of venture debt, said last month it raised a $1 billion fund, and ABS Capital Partners said it raised $500 million.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.