Following Donald Trump’s latest legal travails, the spotlight turned to alternative GOP primary candidates for the 2024 presidential election. Political newcomer Vivek Ramaswamy’s candidacy has taken the GOP field by storm, with Ramaswamy coming out of nowhere to out-poll many candidates with far greater name recognition and political experience such as Mike Pence, Nikki Haley, Tim Scott, Chris Christie, and Asa Hutchinson at one point.
Core to Ramaswamy’s rise is his supposedly successful business track record, with supporters celebrating him as a “billionaire entrepreneur” with a triumphant record of value creation and who is not beholden to the elites. Even The Wall Street Journal’s editorial board has trumpeted Ramaswamy’s supposed business background repeatedly in glowing editorials.
But the haze of fact-free hype surrounding Ramaswamy’s business exploits obfuscates some of the key questions about his true business background which have gone unanswered. Already, Ramaswamy’s standing in the polls dipped just this past week when we revealed his checkered business track record–but here’s a deeper dive as his once-promising candidacy falls like a stone since our revelations.
Profiting from failure as his investors flounder
If the hype surrounding Ramaswamy is to be believed, he made billions by “conjuring drug companies from thin air” before branching out into other successful ventures.
In reality, few of Ramaswamy’s drugs have ever made it past testing, with his failures far outnumbering his successes. In one particularly illuminating example, Ramaswamy first rode to prominence and fortune in 2015 by hyping a supposed drug for Alzheimer’s named Axovant, which ultimately failed.
An obsequious Forbes profile from 2015 captures the initial hype surrounding Ramaswamy’s Axovant IPO. “Vivek Ramaswamy…rang the bell of the NYSE to launch the biggest initial public offering in the history of the American biotechnology industry. Ramaswamy’s Bermuda-based company, Axovant Sciences, had been formed only eight months earlier, but here it was raising $360 million to develop an Alzheimer’s drug that had been all but abandoned by GSK. On the first day of trading the stock almost doubled, giving Axovant a market capitalization of nearly $3 billion….after Ramaswamy had persuaded GSK to part with the unproven remedy for a mere $5 million up front.”
Axovant, which was 78% owned by Ramaswamy’s corporate holding company Roivant, then proceeded to blow up after failing FDA tests, with its stock sinking from $200 to 40 cents. Many small investors who followed Ramaswamy lost their shirts. But for Ramaswamy, it was a good year. His holding company, Roivant, raised $500 million thanks in part to the Axovant hype, all while gradually reducing and diluting its Axovant stake from 78% to just 25%. Ramaswamy’s own tax returns show that the first time Ramaswamy ever made more than ~$1 million in any single year was in 2015, when he suddenly made a whopping $37 million from capital gains–more money than he had ever made in his life, combined, several times over. His own tax returns show this financial lollapalooza was short lived as he quickly returned to making no more than single-digit millions every year afterward until 2020.
In fact, Ramaswamy’s tax returns (through 2021) show the only other year in his life he has ever made more than single-digit millions was in 2020, when he suddenly recorded a windfall $175 million in capital gains. That January, he closed a complex deal with Sumitomo of Japan, where he sold 11% of his holding company, Roivant, and some additional odds and ends to Sumitomo for at least $1 billion. The timing was certainly fortuitous, as this was right before Roivant went public via SPAC the following year, subjecting Ramaswamy to mandatory lock-ups restricting stock sales. Despite going to IPO at $10 a share, Roivant subsequently plummeted to a low of $2.81 a share before somewhat rebounding, but still trades below its original IPO price today. Once again, Ramaswamy seemed to have a knack for cashing out at the right time.
Just how wealthy is Vivek Ramaswamy?
Ramaswamy himself is not known for giving straight answers, even delaying the release of his mandatory financial disclosure forms, though he has gone to great lengths to talk a big game. He has grandiosely declared there is “no limit” to how much he will self-fund his presidential campaign, promising at least $100 million of self-investment.
Although many media accounts label Ramaswamy a “billionaire,” based on his tax returns through 2021 which we reviewed, his liquid net worth appears to be much smaller, with essentially all of his liquid net worth coming from selling assets in 2015 and 2020 under the circumstances that we detailed above.
Much of Ramaswamy’s net worth appears to be tied up in hard-to-value illiquid equity stakes, especially his most substantial holding, a 7% stake in Roivant. The valuation of Ramaswamy’s stake has fluctuated dramatically amidst massive volatility in the speculative stock, falling to less than $100 million last year but rebounding to $500 million now amidst a surging stock market. However, as an insider, Ramaswamy is tightly bound by SEC rules on when and how he can sell, in addition to lock-ups associated with his SPAC limiting how much stock he can sell, which constrains how much he can tap into his Roivant stake for liquidity.
Ongoing cash losses
Despite bragging that he is not “beholden to donor masters” thanks to his fortune, virtually all of Ramaswamy’s companies operate in the red, and none have ever turned a profit consistently. His flagship holding company, Roivant, has never once turned a profit since going public, losing $433 million in 2020, $698 million in 2021, and a whopping $1.12 billion in 2022, with Bloomberg predicting another $1.03 billion in losses in 2023.
As we have shown previously, another one of Ramaswamy’s flagship ventures, Strive Asset Management, is stagnating with its largest ETF, the Strive US Energy ETF (DRLL), having less AUM today than it did when it was launched in August/September 2022. Its AUM is down nearly 25% from the start of this year alone, and Strive’s so-called activist campaigns are laughed off by CEOs who think it is a bad joke.
To be sure, many companies operate in the red for prolonged periods of time–Amazon went 20 years before turning a profit. But what this means is that these money-losing companies are continually dependent on new investor funding coming in–or else they die. Thus, far from being self-reliant and self-funding, Ramaswamy needs genuine billionaires to sustain his cash-burning enterprises.
A self-aggrandizing origin story
A huge part of Ramaswamy’s self-created origin story is how he built a successful business when he was still an undergraduate in college, a database called StudentBusinesses.com, and supposedly sold out for millions to the Kaufman Foundation in 2009. He has sat for countless fawning interviews across print media, television, and podcasts focused on his earliest business triumph.
However, Ramaswamy’s 2009 tax returns show realized capital gains of only $37,000, hardly a lucrative exit. The following year, in 2010, Ramaswamy reported zero in capital gains.
Similarly, despite bragging that he continued to work as an investment partner while also a full-time student in law school, Ramaswamy received a lucrative scholarship from–of all people–the Paul Soros Fellowship, funded by the same Soros family that is a bogeyman to the alt-right. It seems difficult to reconcile why Ramaswamy would have needed to have the Soros family pay for his studies while he was supposedly simultaneously spinning almost suspiciously well-timed investments in Pharmasset and Inhibitex. In a fitting coda, Ramaswamy then reportedly paid to have his Wikipedia page scrubbed of the Soros Fellowship when he declared for president, at the same time he was suing Davos for merely naming him.
Ramaswamy’s device to avoid scrutiny of his own record is by flamboyantly making outrageous proposals targeting everything–from voting age to retirement age to iconic companies to rescuing banks from collapse–much like a court jester of corporate governance. Thanks to the frenetic finger-pointing, the facts have not caught up to his myth-making–until now.
Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and Senior Associate Dean at Yale School of Management.
Steven Tian is the director of research at the Yale Chief Executive Leadership Institute.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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