VCs are fighting, investors are annoyed, and the presidential election has become a constant distraction that Silicon Valley just wants to be over

Jose Luis Pelaez Inc/Getty, Michael Ciaglo/Getty, Tom Williams/Getty, Tyler Le/BI

• Political advocacy, especially for Republicans, used to be largely taboo in tech.
• The outspokenness of VCs is causing consternation among the limited partners who fund venture firms.
• Some VCs blame the election for an unusually slow summer of dealmaking.

A few weeks ago, multiple tech investors asked a partner at an early-stage venture capital firm if she would sign onto VCs for Kamala, an advocacy group to elect Kamala Harris as president. She didn't sign, not because she doesn't support Harris (she does) but because she sees no upside in broadcasting her political intentions.

"We're here to manage your money and make you a lot more of it. We're not here to comment on anything else," said the partner, who asked to remain anonymous because she said it felt "off brand" to comment on politics.

Political advocacy, especially for Republicans, used to be largely taboo in tech, which is centered in some of the bluest areas of the country; more than 85% of San Francisco voters went for President Joe Biden in the 2020 election.

"The majority of Silicon Valley, whether entrepreneurs or investors, has always been and remains broadly liberal," said David Hornik, an investor at Lobby Capital and August Capital. "I have no reason to believe any of that has shifted."

What has changed is the minority of Republicans in tech — whether motivated by concerns about regulating cryptocurrency or support for Israel — have become more emboldened to share their views, which in turn has caused Democrats to amp up their support for Harris.

"There's been an airing of grievances that we don't normally see out there," said Leslie Feinzaig, founder of VCs for Kamala.

No one has been more emblematic of the shift than Elon Musk, who endorsed Trump last month and hosted a rambling interview with him last week on social media platform, X. The former president has also received endorsements from famous VCs Marc Andreessen, Ben Horowitz, Doug Leone, and David Sacks.

After hand-wringing Silicon Valley had gone red, liberal voices like LinkedIn cofounder Reid Hoffman, Netflix cofounder Reed Hastings, and venture investor Ron Conway affirmed their support for Harris. More than 800 investors have signed onto VCs for Kamala.

But even Feinzaig, whose day job is managing the early-stage firm Graham & Walker, is not entirely comfortable being an advocate. She would much rather be spending her time making deals and helping founders.

"I cannot believe that I, of all people, became a political spokesperson," said Feinzaig. "We had a no politics rule at Graham and Walker. We try to just respect all views."

Choosing a VC because of politics

Everyone BI spoke to for this article stressed business still comes first. However, many also acknowledge politics can't help enter into decisions about how founders choose to fund their company.

"If their values are not aligned, or in this particular case, if they know a particular VC is MAGA, they're less inclined to have them on their cap table," said Divya Kakkad, a partner at Graham & Walker. (Another VC pointed out many liberal founders would love to get a term sheet from Sacks' Craft Ventures or Thiel's Founder's Fund.)

Some VCs also blamed the election for an unusually slow summer of dealmaking. The constant chatter has also dragged down the performance of some companies, according to Jesse Middleton, a general partner at Flybridge, an early-stage AI-focused firm.

"The surrounding noise can be a major distraction for founders, affecting their morale and productivity," said Middleton. "This distraction extends to both fledgling and established startups, potentially destabilizing their growth trajectory."

All the attention on the election has also been a factor in companies delaying their plans to go public until after November, according to Cameron Lester, global co-head of technology, media, and telecom investment banking at Jefferies.

"This is a really noisy time with the election," said Lester.

ServiceTitan, a Los Angeles-based startup that makes software to help tradespeople manage their businesses, was originally targeting this fall to go public. Now, executives are waiting until after the election concludes to make any decision, according to a source familiar with the matter. (ServiceTitan did not respond to a request for comment.)

Limited partners are 'irritated'

The outspokenness of VCs is also causing consternation among the limited partners who fund venture firms, according to two sources.

"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," said an LP who has backed many prominent VC funds in the Bay Area and New York. "Other than that, they shouldn't be posturing for a political candidate."

Publicly supporting candidates has no upside for LPs, especially considering many LPs have their own agendas, added a VC.

"I know LPs are very irritated," said the VC. "If I hired you to be a mechanic, I just wanted you to fix my car and not spend your time being a political advocate."

He pointed out a pension fund for union workers cannot be thrilled with a VC who endorses Trump, who has spoken out against unions.

"What most LPs worry about is the headline risk for you as a reporter to write an article and mention one of their general partners, and then they have to answer to their board," said the LP. "It stresses them out."

Still, according to another VC, for all their dismay, most LPs are unlikely to do anything beyond voicing their displeasure in a phone call.

"If you're making money for LPs, they don't care what political persuasion you are," said the VC.

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