The New VC Idea That Surely Won’t Backfire: Colonies of Tech Bros

A gleaming, futuristic, tech-bro utopia in the Mediterranean. A crypto paradise on a small, rural island in Honduras. A virtual startup hub in Nigeria, where entrepreneurs can gather and start businesses—tax free.

All of these ideas have attracted interest, headlines, and millions of dollars from investors in recent years, making “startup cities” a hot topic of conversation in Silicon Valley. (Look no further than the proposed new city in Solano County, California, funded by some of the wealthiest names in tech.) But what the above projects have in common is not just their ambitious aspirations for the future, but a shared funding source: a startup-city venture capital fund founded by the grandson of a free-market icon and backed by some of the most powerful tech scions in the United States.

Their ultimate goal? To unite these cities into an ideologically aligned, lightly governed, VC-backed state.

Pronomos Capital’s sparse, muted website disguises its lofty aspirations—and millions in funding. The venture capital firm, founded in 2019, has raised at least $13.3 million from free-market evangelists including Peter Thiel and Marc Andreessen. Its mission, according to the website, is building a “new model for urban development” where “the city is the product” and “everyone has access to fair and reliable governance.” In a 2020 podcast episode, founder Patri Friedman described the company as “the first venture fund dedicated to charter cities.”

In practice, this means Pronomos funds the creation of privately owned and operated cities in developing countries, where investors can experiment with new forms of business, government, and even medical treatments without burdensome government regulations. Friedman maintains that this is a philanthropic endeavor—his Twitter bio reads “alleviating global poverty with startup cities”—but there are plenty who disagree.

“It’s basically a colonial endeavor that they’re involved in,” Sarah Moser, a geography professor at McGill University who specializes in new cities, told The Daily Beast.

“They want to have a boys-only treehouse where they can go and do their bad-boy stuff and then come back to civilization,” she added. “They’re little boys who don’t want anyone to be the boss of them.”

Friedman, 47, is the grandson of Milton Friedman—an early member of the Chicago School of Economics and a forceful proponent of free-market principles. The younger Friedman took his grandfather’s capitalist ethos to the extreme, becoming a crypto-loving, biohacking, self-described “anarcho-capitalist” who dabbles in experimental medical techniques like gene editing. riedman previously lived with his then-wife in a polyamorous commune in Mountain View, California, which they co-created with several other couples. (After the couple divorced, Friedman “came out” as monogamous in a since-deleted blog post.) He moved to Austin in 2023.

Friedman says he became interested in start-up cities because he was dissatisfied with existing options for how to live. In the 2020 podcast interview, Friedman said he was “frustrated with the U.S.” and “didn’t see much potential for political change, because I had a minority view and this is a democracy.” Failing to find any more appealing alternatives abroad, Friedman took to the sea.

In 2008, Friedman founded the Seasteading Institute—an undeniably outlandish enterprise promoting the formation of independent nations on the ocean. It’s a concept that probably would have gotten little attention if not for a $1.7 million investment by Thiel, the major GOP donor with a documented desire for exploring independent societies. Thiel’s donation put the Seasteading Institute on the map, but only as a concept: 15 years after its founding, there are zero operating sites—likely because, as Thiel acknowledged, floating cities are “not quite feasible from an engineering perspective.”

Friedman himself left the institute in 2011 for another city incubator called Future Cities Development, Inc., which aimed to create charter cities in Honduras. A year later, however, the Honduras Supreme Court ruled the law allowing for privately run cities unconstitutional, effectively ending the project. Friedman liquidated the company and returned to his old job as a software engineer at Google.

Neither of these misfires dulled Thiel’s enthusiasm for Friedman’s ideas. In 2019, when Friedman announced the creation of Pronomos, Thiel and a group of prominent tech evangelists like Andreessen, early Bitcoin investor Roger Ver, and former Coinbase CTO Balaji Srinivasan invested $9 million in the fledgling company. The investors shared an embrace of technology, especially cryptocurrencies, and a disdain for government regulation. But the motivating factor for many seems to be darker, and deeper: disillusionment with modern American society—and a desire to get out.

Perhaps the clearest articulation of this sentiment is Srinivasan’s 2013 speech to a group of budding entrepreneurs at the startup accelerator Y Combinator. In the speech, titled “Silicon Valley’s Greatest Exit,” Srinivasan argued that the tech sector had grown more powerful and more important than the press, the finance industry, Hollywood—even the government.

“We’re putting a horse head in all of their beds,” he said. “We are becoming stronger than all of them combined.”

Soon, Srinivasan warned, people working in those industries would start to get jealous and blame society’s ills on them. If tech titans didn’t push back, he argued, they would find themselves the villains of the country they were so active in shaping.

The answer? To leave.

“What do I mean by Silicon Valley’s ultimate exit?” he said. “It basically means: Build an opt-in society, ultimately outside the U.S., run by technology. And this is actually where the Valley is going.”

This theory of “exit” has only grown in popularity since Srinivasan’s speech, thanks in large part to neoreactionary philosophers Curtis Yarvin and Nick Land. Yarvin, a political blogger beloved by figures like Steve Bannon and Blake Masters, believes that countries should be run less like democracies and more like businesses, with a CEO at the top and residents and workers at the bottom. The workers would have no votes and no voice—only the option to leave. Land, an equally far-right philosopher from the U.K., summarized the theory in his 2012 essay on “The Dark Enlightenment,” writing: “No voice, free exit.”

Start-up cities like those Pronomos is building provide what researcher Robert Burrows calls “the architecture of exit”—physical means by which to escape governments and start new, experimental ones. “Yarvin thinks the best model isn’t a democratic one, it’s a marketized one,” Burrows told The Daily Beast, adding that the issue then becomes how to make government a product people can pick and choose. ”The logical conclusion of that is that you actually commodify governance itself,” he said.

Friedman espoused similar viewpoints in 2002, when he wrote an article suggesting the creation of new governments to foster competition and improve outcomes. In the 2020 podcast interview, he explained that he sees governance not as society but as software; a tech product that can be rolled out in different markets at a low marginal cost. His biggest challenge, he said, is people viewing government “through these old models of morality, or representing the view of the people, or representing some kind of national identity.” What he really wants, he added, is to “get them to think of it as a product.”

Friedman contends that startup cities will be something like laboratories; blank spaces for free thinkers to experiment with different forms of government. He insists that doing so would improve the lives of the local population and, in a tweet about this journalist’s request for comment, accused her of ignoring his “20 years of work enabling people to live together in new ways and my current focus on alleviating global poverty.”

He added in an email to The Daily Beast: “I don’t promote ‘exit over voice,’ they complement each other, exit just happens to be the weak one right now.”

But it is clear that both he and Thiel have a penchant for Yarvin’s anti-democratic philosophies. Thiel has invested repeatedly in Yarvin’s various startups and famously declared in 2012 that he “no longer believe[s] that freedom and democracy are compatible.” (In a recent Atlantic profile titled “Peter Thiel Is Taking a Break From Democracy,” the author reveals that Thiel has a sculpture in his office depicting the entrepreneur as a valiant knight trying to slay monsters labeled “Fair Elections” and “Democracy.”) Thiel did not respond to a request for comment.

Friedman, meanwhile, listed Yarvin’s blog as suggested reading material in a 2009 essay and later praised the philosopher—who goes by the pen name Mencius Moldbug—on Facebook, writing: “I’ve belatedly but happily discovered that Mencius is no longer an obscure single voice, but has somehow managed to inspire an entire school of red pill political philosophy.” Srinivasan, the Y Combinator speaker and a Pronomos adviser, also associates with Yarvin. In 2013, following an unflattering article about the ties between Silicon Valley and neoreactionary thinkers, he emailed Yarvin to suggest they “sic the Dark Enlightenment audience on a single vulnerable hostile reporter to dox them and turn them inside out,” according to The New York Times.

“We are talking about fascism,” Burrows said of the government-as-business ideology. “We are talking about the application of corporate models to everyday life… What it lacks is any understanding of those non-modified aspects of life, like care and emotion, and irrational human attachment to places and to people.”

Some of these theories have reportedly found a home in Praxis, a startup city concept in which Pronomos invested in 2021 and which features prominently on its website. Started by 27-year-old college dropout Dryden Brown and former Boston College wide receiver Charlie Callinan in 2019, Praxis is an as-yet unbuilt city “somewhere in the Mediterranean” that aspires to become a 10,000-person “city of the future.” The founders made a splash this summer with a string of recruitment parties in New York attended by downtown scenesters like Red Scare podcaster Dasha Nekrosova and covered by outlets like Air Mail and New York magazine.

According to The NewYork Times, Brown previously told a speechwriter he hired that the idea for Praxis crystallized after he witnessed looting in Soho during the 2020 Black Lives Matter protests and feared that he might be dragged out of his Soho apartment. Brown has frequently espoused the need for a return to old-world, European societies, and branding materials obtained by the Times emphasize the need for “traditional, European/Western beauty standards on which the civilized world, at its best points, has always found success.”

Brown denied that these statements were made in Praxis branding materials and told The Daily Beast the Times “misreported the genesis” of Praxis, the parent company for which was formed in 2019. He said he never made the comments about the Black Lives Matter protests.

Former employees who spoke to Mother Jones suggest Brown’s politics may be even more extreme than Thiel and Friedman’s. One former employee said Brown believes that monarchy is superior to democracy; another said his ideal form of democracy would be “authoritarian fascism.” Two former employees said Brown encouraged staff to read the work of Julius Evola—a far-right Italian philosopher and Nazi sympathizer—and another said employees are encouraged to read Bronze Age Mindset, a popular book in alt-right communities written by a self-described white supremecist. Brown denied making these statements.

Despite raising nearly $20 million from investors like Pronomos, Srinivasan, the Winklevoss twins, and now-disgraced Sam Bankman-Fried, Praxis has yet to make any physical headway. According to the Times, materials distributed to potential investors claim Praxis is “finalizing [its] first partnership with a Host Government,” with a move-in date of 2026, but no location has been publicly announced. So far, the only citizenship Praxis can offer is a “visa” that grants owners future rights to land ownership in the city.

Roughly 2,000 miles away from Praxis’ 7,500-square-foot SoHo headquarters, another Pronomos project is making physical progress—or it was, before a bitter legal war with its host government. Próspera, a startup city located on the Honduran island of Roatán, is the brainchild of libertarian advocate Gabriel Delgado and Erick Brimen, a 39-year-old Venezuelan who shares Friedman’s passion for operating government as a business. A promotional video for Próspera describes it as the “fastest-growing private city project in the world,” seeking to “elevat[e] human potential through a radically decentralized private government framework.”

The beginnings of Próspera gave the world its first glimpse of what a Pronomos-funded city could really look like: The development, which started construction in 2020, has a tax rate in the low single digits and a private arbitration center instead of a state-run court system. It is governed by a nine-member council—four of whom are picked by the founders—and lets companies write their own regulatory code, as long as the council signs off. This lax regulatory system has already attracted medical companies like Minicircle, an experimental gene therapy firm drawn by the founders’ promise of more lenient drug testing laws. (Friedman also happens to be a Minicircle customer, and recently posted a video of himself getting the treatment on Instagram with a comment about his disdain for the U.S. Food and Drug Administration. A spokesperson for the Próspera ZEDE said the company obtained insurance and had to “submit to medical safety and ethical compliance audits by U.S. and Honduran doctors.”)

The reason Próspera was able to take such a “radically decentralized” approach to governance is because the city is located in what is called a “special economic zone,” or an area with more lenient tax and business laws to attract international development. Developing nations create these zones to incentivize foreign companies to set up shop, but research shows they can also backfire, leading to an increased cost of living without a comparable increase in wages. And it didn’t take long after construction on Próspera started for Roatán residents to realize they might be getting the short end of the stick.

Shortly after developers broke ground, residents of the nearby village of Crawfish Rock began sounding the alarm with local and international press. Locals told The Guardian that developers had shown up years earlier claiming to be a charitable foundation that wanted to open a community center. “We didn’t even know what a [special economic zone] was,” Luisa Connor, president of the local community association, told the paper. When residents realized the magnitude of the coming development, they began protesting, fearing they would be kicked off their land or isolated from the rest of the island, according to Rest of World, a nonprofit newsroom covering global tech. Tensions got so high that in 2021, Próspera turned off water, which its charitable foundation had supplied since 2019.

A spokesperson for the Próspera ZEDE, Jorge Colindres, said locals were informed in advance of Próspera development, citing a neighbor’s assembly resolution signed by the majority of the Crawfish Rock families. He denied that there were protests against the development, saying it was only “a couple of individuals spreading unfounded lies in local and international media.” He also said Próspera turned off the water to the village due to pressure from these individuals. (According to Rest of World, the foundation suspended water service when it found out local leaders were trying to find an alternative water source, then demanded they beg for it to be restored in writing. The leaders declined.)

Concerns about Próspera and other special economic zones in Honduras (known locally as ZEDEs) sparked outcry from international humanitarian groups and protests from residents around the country. Presidential candidate Xiomara Castro campaigned in part on repealing the law establishing ZEDEs, and worked with the Honduran Congress to do so after her 2022 election. Castro called the repeal “historic” and claimed Honduras was “recovering its sovereignty,” according to the Associated Press; the United Nations Commission for Human Rights in Honduras and the international nonprofit Human Rights Watch applauded the decision.

The developers of Próspera were less thrilled. In a statement at the time, the company said it “remains committed to the successful development of Próspera.” Seven months later, it sued the government of Honduras for $10.775 billion—nearly two-thirds of the country’s annual budget—claiming it violated international trade agreements by revoking the law. The case has yet to be resolved, and the future of Próspera remains uncertain. But a recent post on its website still calls “those who share our vision and harbor the audacity to court risk” to join them on the island paradise—“not because there are no hardships, but because the struggles which we may encounter are understood to be the very fabric of achieving greatness,” it says.

The dust-up has not stopped Pronomos from pursuing more startup cities in special economic zones. Its portfolio includes a project called Itana, a startup city in Nigeria’s Lekki Free Trade Zone, where investors are exempt from all taxes, custom, duties and levies. According to a writeup in Wired, Itana aspires to be the “Silicon Valley of Africa”—where budding entrepreneurs can “nurture a new generation of tech unicorns” with the help of the tax breaks. Its website promises a “connected community with the ideal governance, digital services and physical infrastructure for builders of the continent to thrive.”

Omolade Adunbi, a professor of Afroamerican and African Studies at the University of Michigan, argues that free trade zones are often not a boon for Africans, but a way for foreign companies to exploit low tax rates and cheap labor. And he worries about the displacement of the native populations to make room for expensive new startups: Itana is located inside another new development called Alaro City, where, according to Wired, residences start at $65,950—nearly 32 times the average yearly salary in Nigeria.

“Some of the land that is going to be acquired for projects like this is land with ancestral shrines and land with cash crops, and all of this will be destroyed to make way for a so-called tech city,” said Adunbi, the author of Enclaves of Exception: Special Economic Zones and Extractive Practices in Nigeria. “What happens to those community members that lose their livelihood and lose their ancestral home?”

Iyinoluwa Aboyeji, the founding investor in Itana, told The Daily Beast that physical development is not Itana’s first priority; it seeks primarily to be a jurisdiction where Nigerian businesses can easily incorporate, even if they are not based there—akin to Delaware in the United States or the DIFC in Dubai. He said the company only bought physical property in the free trade zone because it was legally required to do so in order to operate there. Construction on the physical base had yet to begin, he added, and would not be financed by money from Pronomos. “We’re more focused on the digital free zone, not on the physical,” he said.

Still, there is some indication that the creation of the free trade zone itself has already led to the kind of displacement Adunbi fears. When the Lagos State Government expropriated land to create the free trade zone in 2004, it signed an agreement with nine affected communities, promising compensation, alternative acreage, jobs, health care, and educational opportunities. According to a study from international researchers in the journal land, however, the government has not held up its end. Of the 56 households promised compensation, only one was allowed to negotiate the amount and only four were told how it was calculated, Less than a third actually received the money.

Otunba Lapido Adeokun, chief of the Idasho tribe, told The Daily Beast that he and his community lived on what would become the Lekki Free Trade Zone until 2006, when the state government started evicting them. The government at one point said they had secured about 15 hectares of land for the tribe elsewhere, he said, but the people already living there refused to let them settle. “Our people are scattered everywhere,” Adeokun said.

Those who were able to remain on Idasho lands also suffered.

“Our people are mainly into farming and fishing, but the government has acquired our farmlands and the Dangote refinery has damaged our ocean,” Adeokun said. “Our people now have nothing to do. We are just jobless.”

Adeokun said he believes development is good for the region but that those building in the Lekki Free Trade Zone are going about it the wrong way.“When there was no development in our community, we were eating fine,” he said. “But now that the government is bringing development, we can’t find what to eat.”

“The development that the government is bringing to our community isn’t benefiting the poor,” he added. “It only pays the rich.”

Asked about the land disputes around the free trade zone, Aboyeji said those were out of his control. “That is something only the Lagos state government can confirm,” he said. “What we bought was from the already existing zone, as we were compelled to by law.” He added: “We bought that land three or four years ago. I don’t know how we could be responsible for something that happened 17 years before we bought it.”

The investor also clarified that the company was working in tandem with the Lagos state government on the project. Asked if he was aligned with Pronomos’ goals of free-market governmental experimentation, he said: “Those are American cultural wars. We don’t import those into our country.”

While Pronomos’ cities may be slow to take off, the founders’ ideas have only grown in ambition and scope. Almost a decade after his speech at Y Combinator, Srivasanan published a book building on his call to exit American society. It suggested that if enough disenchanted individuals left and started their own communities, they could eventually combine those societies, across thousands of miles, into one “ideologically aligned but geographically decentralized” state.

“The people are spread around the world in clusters of varying size,” he wrote, “but their hearts are in one place.” He called this idea—and his book—the Network State.

Srivasanan’s book boasts back-cover blurbs by Andreessen, who called it the venture capitalist’s “best” idea to date, and by Naval Ravikant, co-founder of AngelList and another adviser to Pronomos, who called the author “one of the most brilliant thinkers alive.” Friedman expressed similar ideas in an interview with Bloomberg in 2019, telling an interviewer: “Do I want to create the first venture-backed city-state? Hell yeah. That’s what I’m in it for. That’s the long-term goal.’

The tech founders’ ideal, then, is not simply to exit society, as Yarvin and Land suggest, but to rebuild, reconnect, and re-emerge as something even more powerful. The island crypto paradise could merge with the libertarian Mediterranean oasis, creating a tech-run world power to rival the United States itself.

Moser, however, says she’s not too worried.

“They’re incredibly consistent in their incompetence,” she said of the startup city evangelists. “I don’t get too concerned because they cannot make anything work.”