What Epstein’s files reveal about EV startups and Silicon Valley

After the Department of Justice released new documents related to the arrest of sex offender Jeffrey Epstein, investigative journalists found out. he found great connections in Silicon Valley.

TechCrunch’s Sean O’Kane examined the situation A mysterious businessman named David Stern developed a relationship with Epstein and it allowed him to drive a number of electric cars, including Faraday Future, Lucid Motors, and Canoo.

On the latest episode of Equity PodcastKirsten Korosec and I talk to Sean about what he learned, and we discuss whether the Epstein revelations will lead to a big fall in Silicon Valley.

You can read a preview of our conversation, edited for clarity, in the text below.

Sean: There are always people on the fringes who don’t want to be front and center in investing. And that’s why I started looking at these files, partly because a long time ago, flashback 10 years ago on my particular hit, there was just a ton of Chinese money in the space.

This was before even the rush of EV startups in China that we see today (…) In autonomous vehicles, but electric vehicles in particular, there was this moment where Chinese investors and Chinese companies, state-owned automakers, all they wanted to do was look like Silicon Valley startups. So they came here and invested in companies and helped them get off the ground, or sometimes they set up offices in Silicon Valley.

And it was in that environment that many of the companies I’ve been with for a long time emerged. There was no complete picture of how many of them contributed.

One in particular, this company called Canoo, which is now defunct and out of business, had probably the most amazing investment team of them all. They really weren’t ahead of it when they first kind of sneaked out at the beginning of 2018. And honestly it took until there was a case among some people who ran the company near the top that the investors were exposed.

At that time, it was this businessman in China who was very close, the son-in-law of the former fourth-in-command of the CCP under the former leader of China and an electronics giant from Taiwan. And there was this strange guy named David Stern, who was the third founding investor. And there was a lot about this man.

I could tell, back then, that he was a German businessman, with connections in China, but it was not clear how he contributed. The only thing I remember hearing at that time was that he was close to Prince Andrew, which I thought was very strange, this idea that someone told me a long time ago, maybe in 2018 or 2019, that Prince Andrew was involved in the Canoo company in some way, maybe not investing, but advising or something.

It was something that stuck in my head for a long time, obviously, because I went looking for the information when more files came out, thinking that being close to Prince Andrew meant being close to someone like Epstein.

And it was so here, more than I thought, because this person Stern turned from a stutter or a ghost into a person who was present all the time 10 years ago, when we see him rise, about a year and a half, businesses in Faraday Future, trying to persuade Epstein to perhaps throw a few hundred million dollars in the company, which acquired Furaday I bought or was bought at the arrival of Lucid Motors at that time, which I think is incalculable (in) the way that the company grew at that time – and to Canoo.

Epstein never invested in any of these companies although he was close, but it was revealing. And I get into it an article I wrote last weekbut we get a sweep of the ten-year relationship that Stern had with Epstein when he reached out to him early in 2008, hat in hand, and said, “Hey, I want to invest in China. Are you going to lose money?” being the person he seems to be closest to in the end.

Kirsten: All of this is very interesting, and it goes back to my earlier comments about how sometimes when you get a chance to look back with new knowledge about how deals are made, it just changes your perspective and the way you look at time.

And for those who haven’t followed the unpronounceable word “walking,” think about how we think about physical AI today. Everyone was talking about it. Every car manufacturer wants to have the words “the future of transportation” or “mobility.” And so it stands to reason that some of these hidden species have also jumped into it.

Sean, one of the points you made me when I was working on this story with you, in terms of change, you were (saying), it was clear that Epstein and David Stern were not really about money and building companies. It was all about how to make the most money the fastest. And, I think, it’s very historically important and interesting and it gives you a little bit of insight – in addition to all the horrible, horrible, horrible things he did to people, (Epstein) was a complete worker and, to make money quickly. And you see that in these emails it’s an exchange between David Stern and Epstein.

Sean: Yes, to both of these points, I open this article with the time when Lucid Motors (…) had been selling batteries for a long time and then entered the field of driving cars that we know today, but they were struggling to raise their Series D at that time, and they needed the money to start developing their first electric sedan.

They were struggling, behind the scenes in large part because the founder of Arriving quietly gathered this huge price and was kind of pushing people away and making them look like an uninvestable company in some ways, but the hype around the world that at that time was creating opportunities for people like Stern and Epstein, and we see them talking in these emails about, you know, “You know, “Stern” feels that he feels that he is coming to Epstein. Do you get more from Morgan Stanley?”

Epstein turns around and brings back the information, and then you see this discussion, well, Morgan Stanley says that Ford – which was said at the time – had an opportunity to get money, an opportunity to buy, on the table of Lucid Motors (and they will come in Series D). Or is it something that we sell like Ford comes in a few months, if we can get this price at fire sale prices?

In the end, he didn’t do it, but Stern invested in Canoo and helped get the company off the ground.

Anthony: One thing – perhaps a small return from companies or businesses – is the most important thing that is mentioned in every article about Epstein in Silicon Valley, but worth repeating here, is that (he complained) he is guilty of soliciting prostitution from a minor in 2008.

Almost all of the emails we’re talking about in this story (and) in every other story about Epstein in Silicon Valley come later. So it’s a matter of how comfortable people are with the idea that, well, this guy has a bad history. He was not the bad criminal that he finally (became), but there were things that were already known about him, and because he was a source of power connections, to famous names, to money, many people were already ready to look.