MENLO PARK — A month after stunning Silicon Valley by stepping down from payments startup Square amid allegations of sexual harassment, Keith Rabois has resurfaced at one of the valley’s top venture capital firms.
Rabois — a member of the so-called “PayPal mafia” and one of the tech industry’s most powerful angel investors — on Tuesday said he is joining Khosla Ventures as a partner. The Sand Hill Road firm is an investor in Square, which lets merchants accept credit card payments via smartphones and tablet computers.
Vinod Khosla, founder of the venture firm, sits on the startup’s board. In a blog post, he said Rabois “has earned the right to advise entrepreneurs” by virtue of his track record and tough questions. Khosla did not address the circumstances of Rabois’ departure from Square.
Rabois, an early employee of PayPal and LinkedIn, has invested in a who’s who of Web 2.0 startups, including Airbnb, Path, Palantir and Quora. He also sits on the boards of Yelp and Xoom, both of which have gone public in the past year.
Rabois was chief operating officer of San Francisco-based Square from August 2010 until Jan. 25, when he acknowledged that a man who works there had accused him of sexual harassment. Rabois described the relationship as consensual but said he was quitting his job to spare the company the distraction of a multimillion-dollar lawsuit.
In a statement Tuesday issued by Khosla Ventures, Square CEO (and Twitter co-founder) Jack Dorsey said he “couldn’t be more excited” to see Rabois join forces with Khosla, who co-founded Sun Microsystems. Khosla later became a hugely influential venture capitalist at Kleiner, Perkins, Caufield & Byers before launching his own firm in 2004.
In late 2011, the venture firm closed a $1 billion fund, half of which Khosla said would be invested in clean technology.
Rabois, in a posting on Quora, praised Khosla’s “passion, work ethic and obsessive focus” on funding “only entrepreneurs who dream vividly bold dreams.”
He said he himself has dreamed of becoming a venture capitalist since moving to the valley in 2000. He said he’d previously turned down opportunities to do so in order to help build Square and Slide, another Khosla-backed startup that was acquired by Google (GOOG) for more than $180 million.
The PayPal mafia, who helped launch and build the online payments site before cleaning up via its sale to eBay (EBAY), have a notable history in venture capital: Former PayPal CEO Peter Thiel runs San Francisco-based Founder’s Fund along with longtime partners Ken Howery and Luke Nosek.
PayPal board member Reid Hoffman, who along with Thiel put the first outside money into Facebook, joined Greylock Partners in 2009. PayPal finance chief Roelof Botha is a partner at Sequoia Capital, and former marketing honcho Dave McClure runs Mountain View seed fund 500 Startups.
Still, a keen eye for spotting the next big thing doesn’t necessarily translate into success in the button-down world of venture capital. Another prominent angel, Shervin Pishevar, recently stepped aside from his managing director’s role at Menlo Ventures; people close to him said the drudgery of startup board work was less enticing to him than scouting new deals.
In a tweet Tuesday, Pishevar called the Rabois-Khosla announcement “an epic merger of talent.” Rabois will begin his new role in March.
Staff writer Jeremy C. Owens contributed to this report. Contact Peter Delevett at 408-271-3638; follow him at Twitter.com/mercwiretap.
