Tim Draper, a venture capitalist, and bitcoin evangelist is the founding partner of Draper Associates and DFJ. Draper Associates is a powerhouse of venture capital and manages over 6 billion dollars of investors’ assets. Mr. Draper is the third in this familial business and also a founder of Draper University. He received wide coverage for his purchase of seized bitcoins at a US Marshals Service auction.
Tim Draper helped launch Skype, Hotmail, and more than 500 other technology firms in over two decades. He also launched DFJ Global Network, a virtual viral market of venture capital with offices across the world.
As an advocate for free markets and entrepreneurs, Mr. Draper has been recognized as a leader in his field and has received various honors and awards. He has been ranked seventh on the Forbes Midas list and 52nd on the list of the 100 most influential Harvard Alumni. He holds a B.S. degree in Electrical Engineering from Stanford University and an MBA from Harvard. Besides that, he has also been awarded Commonwealth Club’s Distinguished Citizen Award for his achievement in sustainable and green energy.
Tim Draper has always been regarded as the number one venture capital deal maker. To further encourage entrepreneurship, Mr. Draper started BizWorld.org which is a non-profit organization for children to learn entrepreneurship. He also leads an initiative, InnovateYourState to improve the governance of California.
Read on and know more about Mr. Tim Draper and how his rich and diverse experience in Silicon Valley and his passion and persistence has made him set apart from others.
What background and domain expertise do you have? And What makes you turning into an investor?
Tim Draper: I graduated with a BSEE from Stanford and an MBA from Harvard. My grandfather was the first Silicon Valley venture capitalist and my father was one of the pioneers of venture capital. I was the first to develop a global strategy for venture capital.
As an investor, what kind of startups have you invested in? How did you find those startups to invest in?
Tim Draper: I have funded Baidu, Focus Media, Skype, Hotmail, Tesla, SpaceX, Robinhood, Carta, TwitchTV, Cruise Automation, Coinbase, and many others. I have developed a deal flow strategy over the 33 years I have been in the venture capital business. I do a lot of traveling, speak at conferences, started a school for entrepreneurs, built a network of venture capitalists, and invested in a number of accelerators.
What would be the core factors that you decide “Not” to invest in certain companies?
Tim Draper: There are many. Most are when I see that the entrepreneur’s heart is not in it. Other reasons are small market size, no end-user control, low margins, commodity, a feature rather than industry.
What would be the KPI that you usually check about the startups’ growth? It may diverse in each industry like LTV, CAC, MoM, etc. but would be helpful to understand more about your additional investment factors.
Tim Draper: Once I have invested, I monitor the progress of my portfolio by meeting one on one with the companies and get an honest assessment of the company. KPIs vary by industry, company, focus, etc. Competition, cash, and team dynamics are some.
What is the investment range and In a typical year, how many startups do you invest in? And S.Korea headquartered startups have a chance to get investment from you or should be headquartered in certain countries?
Tim Draper: We will invest globally. We tend to invest $1 million to start, and more if the company is in more advanced stages.
Can you list one company that you have passed (rejected) investment before but think you should have invested in that company. If there is any, why do you think you have missed that investment opportunity?
Tim Draper: Netflix, I couldn’t believe that Reid Hastings was going to send DVDs to customers through the US Mail. I expected them to be streaming soon, He said he didn’t think they were ready for streaming yet.
What are the main factors that startups fail as per your experience after getting investment and how can they prevent mistakes in advance from your personal perspective?
Tim Draper: Team dynamics. Losing the founder. Poor cash use or planning. No customer focus.
What’s your advice to entrepreneurs who have a chance to meet investors like you? and What are the top 3 questions that you always ask the founders?
Tim Draper: I ask why? Why are they doing it? The other questions vary according to the business. I recommend that they think big and show me their vision clearly.
What’s your general thought about the term “Global” and What are the important factors (criteria) for Korean startups to consider for international expansion?
Tim Draper: The world is going global. Decentralized technology like Bitcoin is changing the world in finance the way the internet changed it in communication.
As you know, our company name is “beSUCCESS”, what’s your definition of the term “success” as an investor or as an individual human being?
Tim Draper: Transforming industries to make the world better. Making large impacts on society. Making money for my investors. Supporting entrepreneurship.
What are the one or two things that you would do differently if you could go back to 10 years ago?
Tim Draper: I would have backed Google, Facebook, LinkedIn, and Netflix when I had the chance.
When you have a chance to come to Korea next time, what kind of Korean entrepreneurs and startups you want to meet?
Tim Draper: The ones that seem a little different.
You can follow Tim Draper here.
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