Jack Selby says venture capital has returned capital poorly for a decade, with the culling in inning two.
Selby says the AI cycle will correct, zeroing tens to hundreds of billions, and he won't underwrite Anthropic at $2tn.
Selby's Copper Sky fund invests in 47 states outside CA, NY and MA, buying 10-20% at a tenth of Silicon Valley valuations.
Peter Thiel's partner says venture's reckoning has barely begun
Jack Selby spent 27 years alongside Peter Thiel and now runs a fund that ignores Silicon Valley. He argues the venture industry broke because thirteen years of zero rates flooded a tiny asset class, leaving managers who raised at the 2021 peak and now rebrand as AI investors. His own fund, Copper Sky, backs companies in the 47 states outside the three coastal hubs, where valuations run far below Silicon Valley. He expects the AI cycle to correct as well.
Takeaways
Venture has barely begun its culling. Selby says venture has returned capital poorly for a decade, because thirteen years of zero rates stuffed too much money into a tiny asset class and spawned weak managers who crystallized no gains at the 2021 peak. The culling is in the second inning.
The AI cycle will zero out billions. Selby expects a correction that wipes out tens or hundreds of billions, and says this boom is capital intensive, unlike the internet era, with heavy spending on chips and data centres. He cannot underwrite Anthropic at a $2tn valuation.
Copper Sky invests outside the three coasts. The fund covers the 47 states beyond California, New York and Massachusetts, where more than 290m people and three quarters of US GDP sit. Its first fund took 10 to 20% stakes for an average $3m ticket, at a tenth of coastal Series A valuations.
Carvana proves the interior thesis works. Sand Hill Road refused to fund an online used car marketplace, so Ernie Garcia Jr. and his father built Carvana from Arizona with family money. Selby cites the $65bn company as one that should never have been built in Palo Alto.
PayPal's real lesson was work ethic. Selby says he was surrounded by people working around the clock, and emails sent to Peter Thiel and Elon Musk at 2am came back within ninety seconds. He calls Thiel an exceptional hiring manager who ripped the Band-Aid off on bad hires.
Liquidity no longer requires an IPO. Weisburd notes that 75% of Q1 2026 venture funding went to five companies, and that tender offers at SpaceX and OpenAI gave investors and employees liquidity without a public listing. More capital, he argues, lets the AI leaders stay private longer.
PayPal's road to eBay
PayPal raised its Series A from Nokia to beam money between PalmPilots, before phones became the obvious device.
Max Levchin led the fight against Russian mobsters attacking the network.
The company sold to eBay for around $1.5bn in 2002, less than four years after it was founded.
The executive team averaged 26 at the IPO roadshow, and Selby says the young team's taste of success left them wanting more.
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