Former Facebook executive turned venture capitalist Chamath Palihapitiya announced this morning that his firm, Social Capital, would no longer raise outside capital.
The firm will transition into a technology holding company by the end of 2018 and will invest $50 million to $250 million off a “multi-billion dollar balance sheet of internal capital only.”
“[We] will focus our efforts on businesses where we can make a difference, in keeping with our mission and values,” Palihapitiya wrote in the announcement.
“Solving hard problems is what we started to do and solving hard problems is what we need to do more of. This requires a radical form of self-belief — not necessarily about our ability to solve them but in our desire to commit ourselves to the long, sometimes uncomfortable path towards progress.”
A spokesperson for Social Capital declined to provide additional information on the firm’s transition.
The new chapter for Social Capital will involve more exits. Several partners have departed the firm in recent months and Palihapitiya writes that “several more are in the process” of leaving.
As far as the reason for transitioning out of VC investing, he says the business had drifted too far from its “core mission” and that he’d tired of the status quo.
“As far as the business of investing goes, Social Capital was firing on all cylinders. We were the second fastest firm in our industry to pass $1B of assets, was managing more than $2B of capital, and investors were clamoring to get in. However, as the firm grew, I found us incrementally drifting away from our core mission and our strategy was increasingly that of a traditional investment firm. It became harder to take the risks we took in 2011 and it became easier to play the same game as every other VC — raise a fund, collect fees, manage limited partners, deploy the capital in obvious things, rinse, repeat. While this is a very reasonable path for most people, it wasn’t right for me and my core team.”