The Roth IRA Playbook of Silicon Valley
Some of the most sophisticated investors in tech have been doing this for decades.
One of my first investors in my first startup, Teachable, wrote us a $10,000 check.
He didn't invest from his brokerage or bank account, though. He invested from his Roth IRA!
And when we sold the company in 2020, his $10,000 had grown to $200,000, with a $0 tax bill.
Most startup investments don't work out, but some of the most sophisticated investors in tech have been doing this for decades.
The Thiel playbook
According to a 2021 ProPublica investigation, Peter Thiel moved $1,700 into a brand new Roth IRA in 1999 and used it to buy 1.7 million PayPal founder shares at a tenth of a penny each.
eBay eventually purchased PayPal in 2002. Thiel sold his shares and kept the proceeds inside his IRA. By the end of that year, ProPublica reports, his Roth IRA held $28.5 million (all of it tax-free!).
The same account reportedly went on to hold his $500,000 investment in the first outside round of Facebook, plus early Palantir shares. And by the end of 2019, the account had reportedly grown past $5 billion without a single new contribution after 1999.
Here’s the crazy part: in less than 2 years, Thiel will be eligible to withdraw every dollar without paying taxes on the gains!
And Thiel isn’t alone in this strategy. His PayPal cofounder Max Levchin appears to have run a similar play.
When Yelp filed to go public in 2011, its S-1 disclosed 13.2 million shares held by "PENSCO Trust Company Custodian FBO Max Levchin Roth IRA." At Yelp's $15 IPO price, that stake was reported worth over $100 million!
These are extreme cases of startup investments gone right in the right tax-advantaged account. But strip away the zeros and the mechanism is identical to what my Teachable investor did with his $10,000: hold high-risk startup equity where the gains may never get taxed.
Thiel and Levchin just happened to be early to companies that became generational.
The structure they used isn't exotic or reserved for billionaires. It's the same Roth IRA opened by millions of Americans.
Why this works
A quick refresher on the Roth IRA:
You contribute after-tax dollars, so no deduction going in
All growth inside the account is tax-free (and penalty-free as long as its held till you are 59 and a half)
Qualified withdrawals in retirement are also tax-free
The account is often used for index funds, but it's available to most asset classes as well.
Thiel and Levchin understood this and put their highest-upside investments inside the one account where gains are never taxed.
The catch most people can miss
1 - You need access.
Thiel had founder shares. Levchin was an early investor in Yelp. My Teachable investor knew me personally.
Historically, most people never see these kinds of private deals.
2 - Even when you do have access, holding startup equity in an IRA means finding a self-directed custodian, transfer paperwork, and annual valuations.
So the most powerful tax account in America rarely holds venture investments.
We hope to help with that
My last companies Carry.com focused on making tax-advantaged investment strategies more accessible to business owners and high earners.
Today, I’m happy to share that we're soon opening the ability to invest in USVC directly from a retirement account through our partnership network, including a Roth IRA.
Quick refresher on USVC: It’s a broad access fund, allowing any U.S. investor to gain exposure to promising companies.
Today, our portfolio includes exposure to companies like Mercury, Supabase, SpaceX, Mercor, Anduril, Recursive, Zip, Crusoe, Anthropic and more!
It’s $500 to get started but the goal is to reduce the exclusivity that has left startup investments inaccessible to most!
Through partnership with other financial providers, we're opening access to USVC in retirements in stages, starting with a waitlist for IRA access and the goal of announcing access in August.
For decades this was a strategy you had to be lucky enough to stumble into.
We think it should just be a strategy you can choose.
— Ankur
P.S. We just shared our first private deal with USVC Select members.
Select is our co-investment program for investors interested in going deeper than the fund.
It includes access to individual deals alongside your USVC position, with a $250,000 minimum investment in USVC or other vehicles managed by AngelList Asset Management (AAM) for qualifying investors, and further subject to AAM’s sole discretion.
You can express your interest here or grab time with our investor relations team to talk it through.
Private markets have historically rewarded patient capital.
The investors who've built real positions in venture didn't find the perfect moment. They started early and stayed long.
USVC is how you build that position, starting with as little as $500.
