Politics

Koch brothers are backing a new firm to invest in disruptive tech in bid to challenge government regulations

Key Points
  • The firm, Trust Ventures, was launched Monday at a private retreat for members of the Koch brothers' political advocacy network.
  • Trust Ventures will work closely with the Koch government affairs team, helping startups to create a "playbook" for dealing with government regulation.
  • The firm will take on "entrenched industries," including health care and aviation.
Watch Charles Koch's opening remarks at his private donor retreat in Palm Springs
VIDEO3:3003:30
Watch Charles Koch's opening remarks at his private donor retreat in Palm Springs

Billionaire industrialists and major Republican donors Charles and are getting behind a new venture capital firm to invest in disruptive technologies, opening another front in their ongoing efforts to challenge government regulations.

The firm, Trust Ventures, was launched Monday at a private retreat in Palm Springs for the deep-pocketed donors of the Koch network of advocacy group. Sal Churi, one of the firm's general partners, said it has received an initial investment of $15 million and has opened up another $15 million round of funding. He declined to say whether the Koch brothers, their companies or their network are providing financial backing.

"We have this shared vision of removing cronyism barriers in public policy throughout society," Churi told CNBC.

The Kochs' government affairs team is partnering with the new firm to identify potential investments and help startups navigate a complicated regulatory landscape. Churi has also worked closely with Charles Koch's son, Chase, in launching the firm.

"All too often in our country today, the greater the innovation, the stronger the forces to crush it before it grows," Chase Koch told the audience in Palm Springs as he introduced the new fund.

Trust Ventures – which is separate from a venture capital fund founded by Chase Koch in November – could have significant ripple effects, both for the tech industry and public policy. In his presentation here, Churi pointed to Uber and Airbnb as companies that have not only delivered healthy returns, but also successfully battled regulations and created powerful constituencies of their own in the process.

"It was Uber's customers and drivers that changed public policy, and they were more effective than any think tank," Churi said at the retreat.

The Koch network is already one of the most powerful forces in American politics. It is devoting up to $400 million to defend the GOP majorities in Congress and support candidates in state and local elections this year. That figure also includes $20 million spent last year to push for tax reform, and the network is committing another $20 million this year to sell it to voters.

At the retreat, Chase Koch characterized Trust Ventures as a new vehicle for breaking economic and social barriers, which the loosely libertarian network believes are often created by over-regulation and government intervention.

Trust Ventures will work closely with the Koch government affairs team, Churi said, helping startups to create a "playbook" for dealing with government regulation. Churi said the firm will take on "entrenched industries," including health care and aviation. He cited an American company using drones to deliver medical supplies to rural communities in Rwanda but that has struggled with operating restrictions in the United States.

"Imagine a start-up able to tap into the know-how of Koch from day one," Churi said at the retreat. "They need our help."