How Did Tom Steyer Make His Money?

Tom Steyer is an American billionaire who is also known for his philanthropy. After signing The Giving Pledge with his wife to give away half their fortune in 2010, he got into politics and the environment. He founded NextGenAmerica to lobby for liberal politics and even ran for President in 2020.

His name continues coming up in politics, and some wonder how did Tom Steyer make his money?

He spent over $191 million on his Democratic run in 2020 without obtaining any pledged delegates. This is on top of a $10 million TV ad campaign to impeach Donald Trump in late 2017. Now his name coming up as a possible replacement for Gavin Newsom as California’s governor if the latter is recalled for his handling of the pandemic.

Steyer’s history is extraordinary, but how did he become the man he is today?

Who Is Tom Steyer?

Steyer is businessman and hedge fund manager who started Farallon Capital in the 1980s. He’s a progressive outsider with a strong business record who calls for congressional term limits, an expanded Supreme Court, and decriminalized immigration. Still, his firm invested in several companies antithetical to those beliefs, like coal and private prisons.

Born in Manhattan, Steyer grew up on the Upper East Side and graduated summa cum laude from Yale University before attending Stanford Graduate School of Business, where he also served on the board of trustees.

He worked for Morgan Stanley and Goldman Sachs in his early years before founding his own hedge fund firm in San Francisco. This is where he made his fortune, building a $20 billion asset portfolio under his management by the time he left in 2012.

After stepping down, he spent his time advocating for alternative energy. He was appointed to an economic recovery task for in California during the pandemic. The group also includes Janet Yellen, Bob Iger, and Tim Cook, all of whom are wealthy and influential in their own rights.

How Did Tom Steyer Make His Money?

Steyer made his money as a hedge fund manager for Farallon Capital. Forbes estimates his net worth at over $1.6 billion based on 10 years of tax returns revealed during his Democratic candidacy run. That’s a conservative estimate though.

The inability to pin down his exact fortune makes it difficult to know if or when he gives up 50 percent. He and his wife, Kat Taylor, were among the first billionaires to sign the pledge, but the best anyone can say is he made his money through the hedge fund.

He was Bob Rubin’s protégé at Goldman and is recognized as an expert at risk-adjusting potential returns. He’s also one of the earliest proponents that return of capital is more important than return on capital. He didn’t make audacious bets and remained relatively quiet, accelerating his asset base quickly.

What Does Farralon Capital Invest In?

Farralon Capital pioneered absolute return investing and focuses on several asset classes. These include value, credit, merger arbitrage, and real estate investments, and the company holds these investments for two to five years on average.

These include coal mining companies and private prisons, which the company invested hundreds of millions in each. It’s estimated by the New York Times that Farralon’s investment in coal mining companies increased their coal production by 70 million tons annually. Many of these investments are under the microscope now that Steyer is involved in politics.

But this hedge fund isn’t his only financial services organization.

What Bank Does Tom Steyer Own?

Besides Farralon, Steyer is also the co-founder (with his wife Kat) of OneCalifornia Bank, which merged into Beneficial State Bank. This community development bank is based in Oakland, California and manages over $1 billion in assets.

This bank states it seeks a triple bottom line, which is profits, environmental sustainability, and economic opportunity for the underserved. The couple holds all voting shares in the bank but take no economic benefit from it.

Beneficial State Bank provides traditional banking services, home loans, personal lines of credit, and more. It is also FDIC insured and helps underserved communities gain access to credit cards, checking accounts, and more banking products they may otherwise not be able to obtain.

How Much Is Tom Steyer Worth?

It’s difficult to nail down his exact net worth but it’s estimated at $1.4 billion in 2021. This is because Steyer is a private citizen who is not required to publish his tax returns. What we do know is based off of his 10 years of tax returns made public in 2019.

Steyer’s tax returns cover only the last third of his 26-year career at Farralon Capital, and it doesn’t take into account the reach of Beneficial State Bank as an asset.

Estimates show Steyer already spent well over $200 million on political campaigns over the past five years. That number is bound to inflate as time goes on, as critics are pushing back against him using fossil fuel profits to clean the environment.

What Does Tom Steyer Do for a Living Now?

Now that he’s retired from hedge funds, Steyer is active in politics. He’s part of a Newsom-formed task force to help with California’s economic recovery. His environmental activism and political ambitions make him a force in Democratic politics. However, his critics argue that it may be too little too late.

The billionaire and is wife gained their vast wealth from investments that are antithetical to their current mission. One could argue they created the problem they are fighting, but it doesn’t make the journey any less noble.

We are unlikely to have seen the last of Steyer’s political ambitions. 

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