California gubernatorial candidate Tom Steyer is trying hard to get voters to look past his previous investments in coal and private prisons.David Crane/MediaNews Group/Los Angeles Daily News via Getty Images
By Anabel Sosa, Lester Black April 23, 2026 (SFGate.com)
Tom Steyer’s resume sounds like a progressive’s worst nightmare: a private equity billionaire who invested in coal and private prisons now using his personal fortune to buy public office.
Yet Steyer has managed to win over far-left groups and rise to the top of the crowded pack of Democrats in this year’s governor’s race.
Steyer has consistently been leading among the Democratic candidates in polling for the past month, and the businessman has recently won several key endorsements, including from major climate and labor unions. The progressive group Our Revolution backed the businessman Monday, and former state Controller Betty Yee endorsed Steyer on Tuesday after she ended her own gubernatorial campaign.
Our Revolution, which was founded by Bernie Sanders and vehemently opposes billionaires’ involvement in politics, defended its endorsement by saying Steyer is working “to challenge the very system that benefits people like him.”
The endorsements won’t hand Steyer the race, but they are the clearest sign yet that Steyer may be successfully shedding his venture capital baggage.
Steyer has spent the past six years arguing that he’s a good billionaire and that his current policy positions, including his support this year of a wealth tax and single-payer health care in California, speak louder than his previous actions. He’s even framed his previous massive investments as the reason he got into politics. The businessman invoked the Bible when asked by SFGATE in February about his previous investment in for-profit prisons, saying the experience spurred him into public service.
“It was a wake-up call for me,” Steyer said. “Should I be doing this job? I mean, there’s a reason that I walked away from my business. There’s a reason that I walked away from all that money.”
From Manhattan to SF hedge fund
Steyer grew up on the Upper East Side of Manhattan and graduated from Yale in 1979. He moved to California to get his MBA at Stanford, and then in 1986, he co-founded his own hedge fund, Farallon Capital, headquartered in San Francisco.
He managed Farallon for nearly three decades before his pivot into politics. During that time, the company invested in a wide range of industries, including many that have gone on to haunt his political career, like Farallon’s involvement in an Australian coal mine deal worth hundreds of millions of dollars, according to the New York Times.
Then there’s Farrallon’s 2004 and 2005 investment in the nation’s largest for-profit prison contractor, Corrections Corporation of America, now named CoreCivic. This investment has drawn perhaps the most controversy. The firm invested nearly $90 million in the company, which currently owns an Immigration and Customs Enforcement facility in Kern County — the state’s largest ICE detention center. That facility is now at capacity and has been described as having “inhumane” living conditions.
Steyer was criticized nearly as soon as Farrallon made the investment. In 2004, a Yale union demanded that the university divest from Farallon for its link to private prisons. Steyer initially responded in 2004 by writing a letter to Yale’s students saying, “We are proud of the work we have done, and continue to do,” according to Politico.
Farrallon sold the prison stock in 2006, and Steyer stepped down from the firm and sold his ownership stake in 2012. But his time at Farrallon made him incredibly wealthy. He is worth an estimated $2.4 billion, according to Forbes.
In a TV ad that his campaign started airing this month, he is shown at what is depicted as a town hall responding to a question about his CoreCivic investment. He says nearly the same thing he told SFGATE in February: “It was a wake-up call. I felt like I was not going to be living my values the way I wanted to.”
Decades of apologies
Steyer quickly transitioned from businessman to philanthropist and Democratic mega-donor after he left his private equity job. By 2014, he had already given $75 million to various causes, and he’s gone on to spend hundreds of millions of dollars on electing liberals across the country. He’s also poured cash into progressive causes, especially environmental protections, making that the centerpiece of his 2020 presidential campaign.
Despite his willingness to spend his own money on Democrats, Farallon Capital’s investment in the private prison company has long been a thorn in Steyer’s side. Former President Joe Biden, his Democratic opponent in the 2020 primary, accused the businessman during a debate of investing in prisons that had “hog-tied young men.” Steyer responded by saying he had sold the stock and has since worked to end private prisons in California.
Steyer’s investment record didn’t become a much bigger issue in his presidential primary campaign, likely because it ended before he won a single state primary. But as his name rose in California’s crowded gubernatorial race last year, Democratic rivals like former Rep. Katie Porter have attacked him for profiting off the allegedly inhumane facilities and accused him of being hypocritical for attacking ICE after having invested in its detention centers.
In addition to his “wake-up call” line, Steyer has responded by touting his past support for criminal justice reform, including lobbying for a policy to end cash bail, a collaborative effort with then-Assemblymember Rob Bonta, now serving as the state’s attorney general.
These admissions are perhaps what it takes for a billionaire to make voters — at least Democratic ones — comfortable with his financial past. Steyer has also promoted progressive policy ideas like dismantling the PG&E monopoly, banning social media use for minors under 16, and supporting single-payer health care.
Since he jumped into the governor’s race in November, he’s been endorsed by Smart Justice California, a progressive criminal justice advocacy organization, and Courage California, another progressive group, which specifically cited Steyer’s vision for “abolishing ICE.” Assemblymembers Isaac Bryan, Lola Smallwood-Cuevas and Mia Bonta — all members of the Legislature who have sponsored high-impact prison reform bills in recent years — have also endorsed him.
Still, the Democratic field remains overcrowded. Steyer has maintained his place at the top, but a recent surge for rival candidate Xavier Becerra, the former health secretary in the Biden administration, shows that Steyer could yet again burn nine figures on a failed campaign.
In the end, Steyer says the prison investment was what pushed him into politics. In the February interview with SFGATE at this year’s California Democratic Convention, Steyer invoked the biblical story of Paul’s conversion to a follower of Jesus Christ to explain his transformation.
“For those of you who are familiar with the story of Damascus, when Paul was crossing the bridge as the strongest opponent of Christ, and on the road to Damascus, he decided he was the strongest backer of Christ. So at some point,” he said, “I just decided this is not for me.”
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April 23, 2026
Senior California politics reporter
Anabel Sosa is the senior California politics reporter at SFGATE. She previously covered the statehouse and elections for the Los Angeles Times. She has a masters degree in investigative journalism from UC Berkeley. You can reach her at anabel.sosa@sfgate.com.
News editor
Lester Black is a news editor at SFGATE. He has written for FiveThirtyEight.com, High Country News, The Guardian, The Albuquerque Journal and The Tennessean. He previously worked at The Stranger and the Clarksville Leaf-Chronicle.
