What the Epstein files reveal about EV startups and Silicon Valley

Source: TechCrunch

Summary

After the Justice Department released a trove of new documents tied to infamous sex offender Jeffrey Epstein, journalists digging through them have found extensive connections to Silicon Valley.

TechCrunch’s Sean O’Kane examined how a mysterious businessman named David Stern built a relationship with Epstein and pitched him investments in multiple electric‑vehicle startups, including Faraday Future, Lucid Motors, and Canoo.

On the latest episode of the Equity podcast, Kirsten Korosec and I talk to Sean about what he learned, and we discuss whether the Epstein revelations will lead to broader fallout in Silicon Valley.

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

Transcript (excerpt)

Sean

There are always people at the edges who don’t necessarily want to be front and center in the investment scene. That’s why I started looking through these files—partly because, ten years ago, there was a ton of Chinese investment in the space.

This was before even the rush of EV startups in China that we see today. In autonomous vehicles, but especially electric vehicles, there was a moment when Chinese investors and state‑owned automakers wanted to be seen like Silicon Valley startups. They came here, invested in companies, helped get them off the ground, and sometimes even set up offices in Silicon Valley.

In that environment, many of the companies I’ve covered for a long time popped up, but we never had a full picture of how they were funded.

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One particular company—Canoo, now bankrupt—had perhaps the most mysterious set of investors. They weren’t upfront when the firm emerged from stealth in early 2018. It wasn’t until a lawsuit involving senior executives that the investors were revealed.

At the time, the investors included a Chinese businessman (the son‑in‑law of a senior CCP official) and a giant electronics magnate from Taiwan. Then there was a strange figure named David Stern, the third founding investor. Very little was known about him.

I knew he was a German businessman with some China connections, but his involvement was unclear. The only thing I remembered hearing was that he was close with Prince Andrew—a detail that stuck with me for years. I later assumed that proximity to Prince Andrew meant proximity to someone like Epstein.

That assumption proved correct. Stern transformed from an enigma into a central player in a decade‑long series of deals. Over about a year and a half he pitched investments in Faraday Future, tried to convince Epstein to throw a few hundred million dollars into the company, attempted to buy a 30 % stake that Faraday’s founder held in Lucid Motors, and was involved with Canoo.

Epstein never actually invested in any of those companies, but the connections are revealing. In the story I wrote last week, I trace Stern’s relationship with Epstein from an initial 2008 outreach (“Hey, I want to invest in China. Will you throw in some money?”) to a point where Stern was seemingly very close to Epstein.

Kirsten

The whole thing is fascinating. It shows how new information can completely reshape our perception of past deals.

For those who didn’t follow the so‑called “mobility” boom, think of it as the current hype around physical AI. Every automaker wanted a piece of the “future of transportation.” It makes sense that secretive players would jump in, too.

Sean, one of the points you made while we were editing the story was that Epstein and David Stern weren’t really about building companies; they were about making the most money as quickly as possible. That’s historically important. Beyond the horrific crimes Epstein committed, he was also a ruthless operator, and you can see that in the emails and exchanges between him and Stern.

Sean (continued)

Yeah, to both of those points really, I open the story with a moment in time where Lucid Motors … they had been basically a battery supplier for a long time and then they pivoted into the passenger‑vehicle startup that we know them as today. They were really struggling to raise their Series D at the time, and they needed that money to start production of their first electric sedan.

They were struggling behind the scenes in large part because the founder of Arrival quietly amassed a major stake, pushing people away and making it look like an uninvestable company in some ways. The hype around all of that at the time was creating opportunities for people like Stern and Epstein. We see them talk in these emails about how Stern comes to Epstein and basically says, “I heard that they’re raising. Can you get information from Morgan Stanley?”

Epstein turns around and passes that information back, and then you see this discussion about, “Okay, Morgan Stanley says Ford— which was reported at the time— had a potential investment or acquisition offer on the table for Lucid Motors and was going to come in on that Series D. Should we invest now and maybe get a big return down the road, or should we sell when Ford comes in a couple of months later if we can get this stake now at fire‑sale prices?”

Ultimately, they didn’t go through with that, but Stern eventually invested in Canoo and helped get that company off the ground.

Anthony

One thing—maybe pulling back a little bit from the specific industries or investments—that’s also an important piece of context that generally gets mentioned in any of these stories about Epstein in Silicon Valley, but is worth repeating here, is that he pleaded guilty to soliciting prostitution from a minor in 2008.

Almost all the emails that we’re talking about with these stories, and pretty much any other story about Epstein in Silicon Valley, come after that. So it’s also partly a story about how people get comfortable with the idea that, “Okay, this guy has a pretty shady past already. He wasn’t the infamous criminal that he eventually became, but there were things that were already known about him, and because he was a source of connections to power, to famous names, to money, a lot of people were just willing to look past that.”