Saeed Amidi (photo by Rick Martin)

Only in Silicon Valley, perhaps, can Persian rug merchants turn into venture capitalists.

Here is the full story (free registration) in the Mercury News today.

Saeed Amidi and his brother were smart in the mid-1990s to buy out their landlord at 165 University Ave in Palo Alto. They made a bid on the property the same day he offered it to them, and then went on to lease it out to companies like Google and PayPal.

The PayPal story is noteworthy. Peter Thiel, then chief executive, told us he was so desperate to get into the Palo Alto office in 1998 that he was willing to accept the cash investment that Amidzad (the investment arm created by the rug brothers) demanded in return for letting PayPal into the property. Amidzad made a tidy 30-fold-plus return.

The brothers founded Amidzad with another Iranian immigrant Pejman Nozad, and they’re all really well networked in the valley — because of the folks who come to their store to buy rugs. (In fact, we met another of their rug customers last night: Aydin Senkut, a former Google employee who has set up a small VC fund called Felicis Ventures.)

Anyway, thus began a long string of investments by Amidzad into tech companies.

Now they’ve upped the ante. They’ve opened a large incubator in Sunnyvale, called Plug&Play, where they’re renting out space to start-ups with special terms. And of course, they’re eager to invest in them too. Already since January, some twenty companies have moved in.

One worrying tidbit: Peter Thiel, who is now an investor, running a firm called Founders Fund told us that early-state, first-round venture capital valuations “are close to where they were in 1999 and 2000.”

Correction: In our Merc story, we gave the wrong sq. footage for Plug & Play. The Amidis have 150,000 sq feet. It is a big building. Also, as Jojo notes below, the name of their recent investment is Melodis.

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