The Blue Wave Hits Sand Hill Road

Ben here. VCs are paid to predict the future and bet on the right people, so the wager by some VCs to go all in on MAGA now looks like a bad bet after Tuesday’s overwhelming Democratic victory.

On X, owned, of course, by GOP megadonor Elon Musk, there were lots of quips about returning to an era of DEI, pronouns, and land acknowledgments.

On Wednesday morning, some of the loudest VC voices on the right, such as a16z’s Marc Andreessen and Craft’s David Sacks, who also served as the White House’s AI and crypto czar, were remarkably quiet.

Those on the left have been much more talkative, eager to point out that they never joined the MAGA bandwagon.

I asked Reid Hoffman, investor and cofounder of LinkedIn, who donated nearly $40 million this cycle, what message the results send to VCs.

“Voters rejected the status quo, and VCs should take that seriously,” Hoffman told me. “Because some very notable and wealthy tech figures have so publicly supported the Administration as they’ve harmed Americans, tech’s brand has lost massive amounts of trust. VCs should rethink their assumptions about how most Americans are experiencing this economy.”

AI data centers emerged as one of the top villains in this election. Now Goldman Sachs is estimating nearly half of planned US data-center capacity could be affected by election results in Texas and elsewhere. That’s a lot!

One VC told me it’s hard to see how that wouldn’t affect startup valuations for everyone from OpenAI to smaller neolabs.

“They will have trouble finding compute,” he said. “This election result is definitely going to affect the AI economy.”

There was at least one bright spot for Silicon Valley’s biggest political spenders. California’s billionaire tax, opposed by John Doerr, Vinod Khosla, Ron Conway, Peter Thiel, and many others, looks headed for defeat, according to election results in the state.

Still, most VCs, and especially founders, would rather not talk politics. They see it as an unwelcome distraction from the far more immediate business of product launches, fundraising, and hiring.

I felt that disconnect yesterday: I couldn’t stop thinking about the election, while nearly every investor or founder I spoke with wanted to talk about their latest release or upcoming round. That is still the reality on the ground in San Francisco, outside a small but increasingly influential group of investors who have chosen to wade into politics.

Seeing all the posts from VCs during this election made me think of what an LP who has backed many prominent VC funds told me during the 2024 presidential race.

“I’ve always wanted our VCs to just shut their mouths and do their job and not be political unless they’re defending the startup ecosystem,” he said. “Other than that, they shouldn’t be posturing for a political candidate.”

VCs staying quiet? Good luck with that.

The Buzz

Katie here. While everyone was distracted by the election results, Sequoia Capital announced several major developments: No more London office! No more Scout program! And no more Monday partner meetings, which a person familiar with the firm’s thinking told me was so it could move fast and make decisions quickly.

Sequoia is often seen as setting the tone for the industry, so this gained a bit of attention on social media.

The firm says it will still make bets in Europe, but many in the continent’s startup scene were trying to make sense of what this means for the ecosystem.

Victor Riparbelli, CEO and cofounder of UK-based startup Synthesia, posted on X that “the sad reality is there just aren’t enough deals in Europe to justify an office here.”

Ann Bordetsky, a board partner at NEA and head of business development at Factory, had a different perspective. “Everyone’s missing the real story in this Sequoia memo,” she posted on X. “It’s not the London office. You can win European founders in San Francisco because the companies are global from day 1. It’s the no more MONDAY meetings, 24×7 deal cycle and decisions moving with the market rather than holding on to dated VC traditions, bravo.”

Post of the week

Around the Cap Table

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