‘Art and venture capital are both about judgment, style, the message, and moving a cause forward,” said Richard Kramlich, cofounder of New Enterprise Associates. The venture capital firm, which invests in fledgling high-tech businesses that are initially unprofitable, is located on Sand Hill Road in a two-story building that is a cross between an alpine lodge and a 1970s suburban condo complex. Despite its unassuming middle-of-nowhere appearance, Sand Hill Road has the most expensive office space in America. Kramlich and his wife Pamela are adventurous collectors of video art but, at the office, the senior venture capitalist has curated an installation of photographs and prints. By the front door hangs a photograph by Darren Almond of the brightly colored prayer scarves that returning climbers leave at the base camp of Mount Everest. “VCs are like sherpas,” Kramlich explained. “We take entrepreneurs to the top of the mountain and try to bring them back safely.”
When the Kramlichs began collecting video art in the 1980s, they wanted to take a different approach from that of the other collectors they knew. Richard was deeply involved in technology and Pamela, a University of California Berkeley art history graduate, was keen on “what would come next.” She was attracted to art that “moved and talked,” as she put it. The couple began by acquiring video pieces by Fischli/Weiss, Dara Birnbaum, and Bruce Nauman, then moved on to Matthew Barney and Steve McQueen, and more recently bought the entire contents of Joan Jonas’s U.S. Pavilion at the 2015 Venice Biennale—an installation titled They Came to Us Without a Word. The Kramlichs have just seen the completion of their Napa Valley home, designed by Herzog & De Meuron. It consists of two underground floors, in large part given over to the display of their video collection, with an elegant glass and mirror pavilion for living and entertaining on top.
Venture capitalists, or VCs, as they are known, are increasingly important members of the California art world. Many of them sit on the San Francisco Museum of Modern Art’s board of trustees, which raised $610 million for its new building and endowment. Stanford University’s Cantor Arts Center wouldn’t be the same without donations from VCs like Burt McMurtry and his wife Deedee who back countless acquisitions, endow a curatorial position and contributed $30 million to an adjacent building that houses Stanford’s art and architecture department. Needless to say, Bay Area art dealers count on VCs’ support.
Vincent Worms, cofounder of Partech International and now an angel investor with Tekton Ventures, started the Kadist, an art foundation, which boasts a collection of 1,200 works from five continents and public spaces in San Francisco and Paris. As an “angel,” he funds or “seeds” businesses when they are little more than a PowerPoint presentation. Worms also collects what he calls “extremely contemporary, not-well-known artists” with the advice of a team of well-known curators that includes Jens Hoffmann, Hou Hanru, and Philippe Pirotte. Worms sees many similarities between the entrepreneurs he backs and the artists whose work he buys. “They are all young, energetic, intelligent people who aim to change the way you look at the world,” he said. Tech entrepreneurs often explicitly aspire to transform the world, not just alter the way we see it. Worms sees art and venture capital as complimentary and tries to divide his time between the two. When he travels in Asia, for example, his typical day entails “spending the morning with entrepreneurs and the afternoon with artists.”
Venture capitalists’ characteristic business models suggest approaches to collecting and philanthropy that many gallerists find appealing. Andy Rappaport, a VC who now runs his own family office, described the differences between venture capitalists and other types of investors. “When you run a hedge fund, you are usually buying relatively liquid assets and you can transact on a moment’s notice. It suits people who are very transaction-oriented,” he explained. “I could never run a hedge fund. I don’t want to constantly be thinking: should I be selling now? Donald Trump sneezed today; what does that mean for my portfolio?” Startups are illiquid assets. Even the successful ones can take six to ten years to grow into something profitable and/or saleable. The implication for the art market is that a VC is less likely than a hedge-fund manager, a group of whom hit the art market in the mid-2000s, to be a short-term speculator “flipping” artworks at auction. It suggests that VCs may have more affection for their market “failures” and greater stamina in sticking it out to determine whether their art stands the test of time.
Art and venture capital are both alternative asset classes that require intellect and patience. Venture capitalists invest in “stuff that has great promise, but no tangibility,” as Rappaport put it, and in “things that nobody yet appreciates because they are a little weird, but have enormous potential.” The best venture capitalists—not to mention the best contemporary art collectors—have a “pioneer mentality.” In renovating and repurposing three large warehouses in the forlorn district of San Francisco called Dogpatch, Rappaport and his wife, Deborah, have taken a pioneering attitude. Their resulting Minnesota Street Project, which opened earlier this year, aims to create affordable gallery and studio spaces as well as to strengthen the sense of community for the arts in the Bay Area.
Like art dealers, venture capitalists are middlemen who specialize in picking and mentoring talent and managing reputations. Just as art dealers spread their bets across a roster of artists, VCs create a basket of opportunities in the hope that one or two will bring “a big win” to the fund. David Hornik, a general partner at August Capital, collects art with his wife, Pamela, who is actively involved with the Cantor Arts Center. “Ultimately, dealers and VCs have the same goal, which is to make the folks with whom we are working more successful. We are support players,” explained Hornik, who invests not just money, but time and energy into guiding, editing, and “creating public-facing brands” in the companies he backs. When Hornik told his mother that he had taken a job as a venture capitalist, she exclaimed, “I can’t believe you’ve talked your way into a job that only involves talking.” Despite dealing with billions of dollars, most VCs are storytellers rather than number crunchers. Most startups have a limited number of users, little revenue, and no profit, so they have few actual numbers. Instead, VCs rely on persuasive backstories and inspiring predictions to position their entrepreneur as a genius and their technology as revolutionary or at least “disruptive.” Indeed, a VC’s reliance on talk is analogous to a gallerist’s sales pitches about artists’ creative processes, art-historical antecedents, and future relevance.
Jarl Mohn, CEO of NPR and a former VC, underwrites the Hammer Museum’s “Made in L.A.” biennial awards with profits from his angel investments in digital media. He collects “early-stage emerging L.A. artists,” as he put it, because he sees himself as an “evangelist” for the city and wants a focused collection that reflects what’s going on there “at this special moment in time.” A seasoned visitor to studios and startups, Mohn sees at least three strong affinities between artists and entrepreneurs. First, both tend to be risk-takers. “Entrepreneurs have made a choice not to have a normal job that pays them a regular salary because they want to create something,” said Mohn. “Artists are taking even larger risks. An entrepreneur may get a low salary with options on the side, but artists are putting it all out there.” Second, both aspire to originality. “Some entrepreneurs are copying other companies’ ideas or just trying to make them better. Some artists are doing the same. But the best aim to innovate.” Third, they are both continually “iterating.” As Mohn explained, “What I love about new technology is that it is not perfect. You release it and then you improve it, through pivoting, changing, iterating. That is what great artists do. They start with an idea, try it out in one work, then another, and sometimes it evolves from painting to sculpture and into a whole different thing. Good artists—I think more than anything—iterate.”
A high percentage of the entrepreneurs financed by VCs are engineers. Komal Shah studied computer science and worked for many years as an engineer and product manager. She and her venture-capitalist husband, Gaurav Garg, collect paintings that are mostly abstract and predominantly made by women and African-American men. Shah balks at collections assembled according to “standard recipes” by consultants, advising their clients on “safe investments.” “When you start looking for ‘safe’ things, that’s when all your passion goes out the door!” she declared. She prefers to use museum curators, such as SFMOMA’s Gary Garrels and Tate’s Mark Godfrey, as unofficial sounding boards.
Shah sees engineering as an imaginative endeavor and product management as instrumental in “creating things.” She identifies with the ways that artists think and loves spending time with them. Among those whose company she enjoys are Mary Weatherford (“gregarious and a true leader”) and Charline von Heyl (“a complete riot”). Shah leaves conversations with artists “feeling very excited, very invigorated.” They make her think about the tech sphere differently and vice versa. “In technology, it’s mostly about evolution. A startup can bring in some revolutionary changes and alter the landscape, but it’s still a kind of linear change,” she pointed out. “But artists make crazy changes, completely out of the blue, which invokes in me a new level of respect.”
A final value shared by the art and tech worlds relates, unexpectedly, to commerce. From the perspective of venture capitalists, the best entrepreneurs and the most significant artists have missionary rather than mercenary motives. Their vision allows them to make the right long-term decisions, despite short-term pressures. They shouldn’t be too far ahead of their time, but they ought not pander to the moment either.
Sarah Thornton is the author of three books, 33 Artists in 3 Acts, Seven Days in the Art World, and Club Cultures.
A version of this story originally appeared in the Fall 2016 issue of ARTnews on page 102 under the title “Risky Business.”