In the early 2010s, getting an invitation to Yuri Milner Castle in Los Altos, California, meant that you had entered the most exclusive circle in Silicon Valley. Milner is known for having made extremely lucrative bets on Airbnb, Alibaba, Twitter, Facebook, and other startups, and for being a prolific patron of science. He was friends with the late Stephen Hawking and is known to be related to Mark Zuckerberg and actor Ed Norton. When Milner hosted a party to watch the HBO series Westworld, Google co-founder Sergey Brin showed up.
Milner is also an extremely wealthy Russian who began his career in the venture capital sector with the help of Alisher Usmanov, a metallurgical tycoon of Uzbek origin close to Russian President Vladimir Putin. Most people who know Milner have shrugged their shoulders at his connection to a pro-Putin oligarch. Milner's business - early stage technological investments - is far removed from the world of Russian oligarchs who grew rich by acquiring state assets at low prices. And Usmanov's money, as well as that of the state-controlled bank VTB PJSC, came during the presidency of Dmitry Medvedev, when the Obama administration called for a “restoration” of Russian-American relations.
But now, while Putin's army bombs Ukrainian cities, Usmanov and VTB are on the sanctions lists. And Milner is on the defensive. “I can't go back and change history,” he says during several hours of Zoom interviews with Bloomberg Businessweek. “I can't change the fact that I was born in Russia. I can't change the fact that we had some Russian funds.”
Milner's non-profit foundation, Breakthrough Prize Foundation, and his venture capital firm, DST Global, have issued statements condemning “Russia's war against Ukraine, its sovereign neighbor,” as DST says. A statement by the Breakthrough Foundation, attributed to President Pete Worden, refers to Russia's “brutal and unprovoked attacks on civilians.” Milner and his organizations have pledged $11.5 million to finance humanitarian efforts.
Even so, Milner himself is careful when talking about the war in Ukraine. He does not want to comment on Putin, but rather cites the statements of his organizations, and calls the war a “heartbreaking tragedy”. At age 60, she holds a family photograph in black and white, taken around 1970. He shows him as a child, wearing a knitted hat, in Zaporizhzhya, Ukraine, where he says he spent many summers with his father's family. Days earlier, he says, he and a cousin helped evacuate a family friend, an older woman, from Cherkasy; her husband decided not to leave. “I fully support the statements of DST Global and the Breakthrough Prize Foundation,” he says.
Milner, whose net worth is $3.9 billion, according to the Bloomberg Billionaire Index, is in a precarious situation. There is a long history of foreign money of dubious origin coming to Silicon Valley, especially the funds from Saudi Arabia that continued to flow even after dissident journalist Jamal Khashoggi was brutally murdered by government agents. But the war in Ukraine has galvanized the West, says Ayako Yasuda, a finance professor at the University of California at Davis. “ibStartups have real reason to worry about receiving funding from DST,” he says.
There is a risk that Milner will be tainted by the association, which would cause entrepreneurs to skip those lavish parties and reject DST's funding offers. Investors might also hesitate to recommit to the company the next time it raises money, and Milner's philanthropic work, especially a series of scientific achievement awards known as the Breakthrough Prize, could lose its cache. Milner downplays these risks.
“The facts are on our side,” Milner says, arguing that DST has long been independent of the interests of the Kremlin. He spoke from Dubai, where he was helping to raise funds for a company he doesn't want to name. He is still a Russian citizen, but he also holds Israeli nationality. He has been living in the United States on an O-1 visa, for people with “extraordinary ability”, a common avenue for foreign-born tech entrepreneurs. He paid $100 million for the Los Altos estate in 2011 and today considers the United States home.
If Milner is frustrated, it is partly because his move to the U.S. came during a year long campaign to separate itself from its controversial initial sponsors. “The great irony is that right now we are the least Russian fund and we have been because we have made a constant effort,” Milner says. DST, he says, has not taken any money from Russia since 2011, when it raised a $900 million fund, nor has it made any investment in Russia. Milner points out that, until recently, most Western banks did business with Russia, years after they stopped doing so. He says he hasn't seen Usmanov in about five years and hasn't been to Russia in eight.
To support its claim that it has been separated from Kremlin-related cash, it shares a letter dated March 19 from its CFO Kenneth Leung outlining the steps that DST takes to comply with the “know your customer” banking and anti-laundering provisions of money. “If he lies,” Milner says, referring to Leung, “he will go to jail.”
The company is actively working on a handful of operations at various stages of diligence, he says. Having raised a ninth fund of nearly $4 billion in 2021, DST won't need to raise funds again for another year or two, and Milner says he believes investors will stay loyal. Some did not renew with DST for their last fund, but it wasn't because of politics, he says. It was because in 2018 it raised its commissions to 25% of profits, from 20%.
Milner has powerful defenders. “Yuri Milner has been a valued friend and partner of mine, our firm and many of the best tech startups in the United States for nearly two decades,” says Marc Andreessen, board member of Meta Platforms Inc. (also known as Facebook), he wrote in a tweet on March 1. Max Levchin, the Ukrainian-born CEO of the fintech company Affirm Holdings Inc. qualifies Milner as a good friend. “He has been a visionary investor and, just as importantly, a passionate advocate and promoter of real science,” Levchin said in a statement.
Ryan Petersen, CEO of freight giant Flexport, has accepted a series of investments from DST, most recently in February, and says he would not hesitate to accept more. “I don't have any concerns,” he says, adding that any questions he had about DST investors were fully satisfied years ago. “Yuri has an incredibly high ethic.” He calls efforts to connect Milner to the Kremlin “on some level, a little crazy” and suggests that they are discriminatory, confusing Milner's birthplace with Putin's policies.
Milner's status stems from his success as an investor in the early stages of his career and his interest in science. Named after the great cosmonaut Yuri Gagarin, Milner holds a degree in physics from Moscow State University. After deciding that he would never reach the top of the field, he dropped out of a doctoral program in physics and started selling computers. In the late 1980s, when the Soviet Union collapsed, he moved to the United States to study business at the Wharton School of the University of Pennsylvania.
Milner worked at the World Bank in Washington, D.C., in the early 1990s, and then returned to Russia to head a securities agency. Inspired by a report by famous Internet analyst Mary Meeker, she launched an incubator and investment fund to develop Russian Internet companies in the mold of eBay Inc. and Amazon.com Inc. He founded Digital Sky Technologies, a pioneering venture capital firm, in 2005, just as valuations were recovering from the dot-com crash in 2000.
In the late 2000s, Milner, who sought to diversify beyond Russia, created DST Global and set his sights on Facebook. When DST first invested in Facebook in 2009, it did so with a $10 billion valuation, a huge price for a young company in the midst of a recession. But almost overnight, the $200 million investment, which included more funds related to Usmanov than had previously been revealed, according to a 2017 New York Times report based on leaked documents known as the Paradise Papers, established DST as one of the top venture capital firms in Silicon Valley.
As his fortune grew, Milner spent profusely on his personal life. He also put more than $75 million to fund the search for extraterrestrial life and dropped another $300 million in the Breakthrough Prizes. In 2013, he invested in satellite company Planet Labs PBC and Elon Musk's SpaceX rocket company. Milner says that the investment in SpaceX was about 10 million dollars. He sold his position two years later for $23.56 million.
The agreement with SpaceX has not been previously reported. Around the same time, the company, a major Pentagon contractor, publicly boasted that its rockets did not use Russian components, unlike others in the space industry. Milner says he wasn't under pressure to part and that he sold his stake just because he didn't appreciate the full potential of the satellite market. “I underestimated SpaceX,” he says. “Divesting ahead of time was a mistake.” He says he admires Musk and has talked to him about topics such as the search for aliens and trips to the stars. SpaceX representatives did not respond to requests for comment.
In addition to Breakthrough Listen, which seeks alien communication, Milner has also funded Breakthrough Starshot, which is in the early stages of a decades-long project to build tiny, ultra-fast spacecraft that would fly to our neighboring solar system, Alpha Centauri.
He says that the war in Ukraine demonstrates the purpose of the projects, outlined in a treaty he published last year called the “Eureka Manifesto”. If we discover that life exists beyond Earth, the discovery could “be the moment of union of our civilization,” he says. “It may be the equivalent of our generation to the first step on the moon. One of those moments when we all feel like one.”
He says he is confident that life beyond Earth would prove that our current distinctions based on national borders hold us back. “If there is a civilization out there that is a million or a billion years ahead of us, I'm pretty sure it came together as one,” he says. Milner, in other words, is much more communicative on hypothetical intergalactic political issues than in questions about Vladimir Putin.
(C) Bloomberg.-
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