Investment Philosophy

Draper Associates is a global venture capital firm for industry transforming companies

Values

We invest in values that transcend time and trend

We invest in heroes

The future is not pre-defined, it is built. We invest in the heroes that dare to build it.

Heroes take action. They have bold vision and strong conviction, and they move on it. When they face the unknown, they rise to the occasion.

Heroes serve the greater good. What they build makes the world better for everyone, not just themselves.

Heroes inspire others. As they dare to rise and fall and rise again in pursuit of a future much bigger than themselves, they inspire others to do the same. Whether an entrepreneur succeeds or fails, we believe they and the world are better for having dared try.

We invest in freedom

Freedom is cornerstone to a just and prosperous world. We invest in startups that promote freedom, because freedom matters most.

With startups, this often takes the shape of shifting power to the individual. Whether it's the power to communicate (Hotmail, Skype, Twitch), the power to access the world's information (Baidu), the power to create (Webflow), or the power to control your money in unprecedented ways (Robinhood, Coinbase, Bitcoin) -- our portfolio companies are building a freer world.

We invest in progress

We are optimists and futurists, staunchly believing in a future sculpted by innovation. To us, the brightest chapters of history have yet to be written, and technology is the pen that ambitious entrepreneurs will use.

We invest in delight

“The customer is always right." This age-old saying is more than a motto to us; it's a guiding principle. We believe in the power of delighting the customer, a sentiment expressed by some of the most successful entrepreneurs we have backed, including Niklas Zennstrom (Skype), Robin Li (Baidu), and Elon Musk (PayPal, Tesla, SpaceX). They all aimed to "delight" their users, a mindset that contributed to building their transformative companies.

Our focus on customer delight extends beyond technology; it's about creating a customer orientation that genuinely serves and excites those who interact with the brand. At Draper Associates, we champion this value, seeking out Startup Heroes who are committed to exceeding expectations, forging connections, and sparking joy in every customer interaction.

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Criteria

What we look for in our perpetual quest for the extraordinary

Bold Vision

We look for founders with bold vision. The nature of early-stage venture is taking long odds on extraordinary outcomes, and extraordinary outcomes are capped by how big (or small) one envisions things can be.

Deep Conviction

We look for founders who can confidently stand alone, driven by deep conviction. They are not trend chasers or imitators, they are visionaries dancing to their own beat.

Transformational Technology or New Approaches

We look for founders developing or leveraging transformational technology.

Transformational technology is technology that has the power to fundamentally change industries and reshape the way society functions. Some examples include the internet, the smart phone, Bitcoin and blockchain, nuclear energy, and artificial intelligence.

We also look for founders with non-obvious approaches to existing problems and opportunities.

Unfair Advantage

We look for founders that have an unfair advantage with what they are building. Whether it's technical skill, industry knowledge, a powerful network, operational know how, a strong brand, or a legal and regulatory advantage, we are looking for your edge.

Network Effects

We look for products and go to market strategies with strong network effects. When structured strategically, network effects can drive growth with little or no cost, and create a virtuous feedback loop for product value and defensibility.

We particularly love when companies are able to turn their customers into their salesforce.

Big Problems, Big Markets

We look for startups tackling big problems in big markets.

Markets must be in the tens of billions to make sense for our investment strategy, and true trillion dollar markets are even better.

Sometimes big problems are big things most people can agree on (ex: energy, food and water systems, education, healthcare), and sometimes they are non-obvious opportunities to change the world in a way people don't imagine can be better (ex: the jump from horse to car, or SpaceX opening up access to space allowing for infrastructure solutions like Starlink).

End User Control or Mission Critical

We look for startups that directly engage with the end user, rather than serving as an intermediary. The largest companies in the world understand and leverage the value of this direct relationship.

If the startup serves enterprises, it must be mission critical. We look for startups that can become an indispensable part of a business' workflow. Even better if its existence changes the way the broader industry functions (ex: Carta).

Mission Critical

For corporate investments, we look for companies that can become an indispensable part of an industry's workflow, embedding themselves so deeply that removal becomes challenging.

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Approach

How We Do It

We open categories

Given our style of investing (early, bold, transformative), our portfolio companies often create and anchor new categories for venture investing (ex: Tesla for Transportation, SpaceX for Space, Coinbase for Crypto, Robinhood for FinTech, Webflow for No-Code).

While these categories make sense in hindsight, opening them demands vision and courage.

We keep an open mind

We keep an eye out for ideas that sound crazy -- often like something out of a science fiction novel. Having an open mind about "crazy" ideas and engaging with them helps shape our vision for the future. We can't invest in most, but every so often this exercise turns into a bet like the Woolly Mammoth.

We invest in our network

Deep-rooted investments in our startup and venture ecosystem yield unparalleled proprietary deal flow from around the world.

From our relationships with current and future entrepreneurs (via Meet the Drapers, Draper University, Draper Startup House), to our alliances with- and investments in- other venture funds (via Draper Venture Network, LP Investments, VCx), to our role in the broader conversation of entrepreneurship and innovation (via keeping a high profile and Draper Hero Institute) -- our network is paramount to our success.

We love our entrepreneurs

We have deep respect for founders, and we treat them in line with this. When we choose to back a founder, we let them steer their ship, while we champion their journey. Our commitment is for the long haul, not for quick profits.

We look beyond

From the outset, our gaze has been global. Early on we recognized that talent is everywhere, and venture capital opportunity shouldn't be confined to Silicon Valley or the US.

We launched the Draper Venture Network in the 90's and the innovative ePlanet fund in the early 00's, and pioneered venture capital investments in markets like China, India, and Estonia, among others.

This commitment to founders from around the world has enriched our perspective and given us a competitive advantage, yielding exceptional results.

We continue to look beyond.

We stay disciplined

We stay true to our principles, steering clear of fleeting trends and investments based on hype. We know where to play and how we will win. Our disciplined approach, rooted in decades of experience and earned wisdom, assures sustained leadership in the industry.

We ask the stupid questions

Often, it's the seemingly naive or 'stupid' questions that bring the most clarity. We find that as stupid as the question sounds, it is often the question that is on everyone else’s mind too.

Once, an entrepreneur used the term “Web 2.0” extensively in their pitch. While we presumed some understanding on their part, clarity came when we posed a simple question: “What is Web 2.0?” Their inability to answer revealed superficial knowledge, marking them as 'trendy' rather than a trendsetter. Despite frequently using the term in various meetings, it became evident no one had pressed them for its meaning. This single question spared us considerable time, deliberation, and potential loss of investment. The enterprise never took off, affirming our decision. Sometimes, the 'stupid' question proves the smartest.

We are patient

We make short-term sacrifices for long-term success. We have a long-term horizon with our capital, so we care most about what the world will look like in 15 years, not tomorrow. This, in addition to 30+ years of battle tested industry leadership, allows us to navigate through market cycles with resilience.

Our Values

We invest in values that transcend time

We Invest in Heroes

At Draper Associates, we trust our startup heroes to define and build the future. The future is not defined, it is built. Our startup heroes inspire others to excel, achieve more, and turn imagination into reality. We seek founders who embrace long odds for extraordinary outcomes, who run into the fire to save others rather than fleeing to save themselves.

Our heroes' superpower is their self-belief. Like Ironman, they take control of their lives and create tools that improve the lives of others. They transform fantasies and science fiction into reality. When people think about innovative technologies like electric or hydrogen cars, they're envisioning the future that our heroes are building.

We Invest in Freedom

We invest in startups that promote freedom, because freedom matters most. We believe that freedom is more than an ideal -- it's a tangible pathway to success.

This principle drives us to back initiatives that shift power to consumers, encouraging independence and innovation. Our portfolio, with companies like Skype and Coinbase, and investment in Bitcoin, underscores our commitment to freedom, a value that catalyzes transformative change.

Free countries and markets surpass controlled ones, yielding greater liquidity and societal wealth. Freedom fosters progress by enabling open dialogue and creative thinking, transforming problems into opportunities for growth. Our Startup Heroes epitomize this philosophy, creating an environment that empowers teams to envision transformative businesses.

We Invest in Progress

We believe in the transformative power of technology. We see it not just as a tool, but as a catalyst for global betterment. Our commitment to this vision is evident in our portfolio:

‍SpaceX: Challenging the status quo of space exploration, they're not just reaching for the stars, but aiming to make space accessible for all of humanity.

‍Tesla: More than electric cars, Tesla's vision of sustainable energy solutions is revolutionizing industries and ensuring a greener tomorrow.

‍Baidu: Navigating the vast landscape of information, Baidu bridges the gap between knowledge and accessibility, driving a smarter, more connected world.

Driving progress is in our blood. We are optimists and futurists, staunchly believing in a future sculpted by innovation. To us, the brightest chapters of history have yet to be written, and technology is the pen that ambitious entrepreneurs will use.

We Invest in Delight

Our Values

We invest in values that transcend time

We invest in heroes

We invest in freedom

We invest in progress

We invest in delight

Our Criteria

A perpetual quest for the extraordinary

Bold Visions

We are drawn to the seemingly crazy ideas that defy the status quo. To us, these visions aren't outlandish but rather genius, embodying a belief in a future that can be shaped and changed. The ones who dare to dream, challenge norms, and see the world differently are the ones who push humanity forward.

Authentic Entrepreneurs

We seek those unique individuals who are willing to stand alone, driven by an unyielding passion to see their mission through. These are not trend-chasers or imitators; they are visionaries with a spark in their eye, owning their journey like superheroes, frugal and confident, dancing to their unique beat.

Unique Technology or Approaches

We are fascinated by non-obvious solutions, groundbreaking ideas that challenge conventional wisdom. Nothing too easy to replicate, but rather those that explore the edges of possibility.

Edge

We want innovators who have a unique edge. Do they have the firsthand experience, insight, or technology that positions them ideally to transform an industry? From healthcare to fashion, banking to entertainment, from brain-computer interfaces to space, we look for those ready to leverage new technologies like CRISPR, Bitcoin, virtual reality, or self-driving cars to create revolutionary change.

Distribution Advantage

We look for network effects or viral marketing strategies that make customers a sales force for the startup. Our Startup Heros can best figure out how to market products liberally throughout the world with little or no cost of distribution. How a company spreads its influence from customer to customer, often indicates potential success.

Big Problems, Large Markets

We prioritize startups that tackle substantial, long-standing problems in unique ways that redefine the game. Potential trillion-dollar markets, global issues like security, education, climate change, or health are where we see enormous opportunity.

End User Control

A focus on directly engaging with the end user, rather than through intermediaries, aligns with our belief in customer-centric business models. The largest companies in the world understand and leverage the value of this direct relationship. If corporate, it must be mission critical.

Mission Critical

For corporate investments, we look for companies that can become an indispensable part of an industry's workflow, embedding themselves so deeply that removal becomes challenging.

Our Differentiators

how we do it

We create categories

We take long odds on extraordinary outcomes. Investing in a company during its earliest stages allows us to enter at the ground floor, guiding its trajectory. While we recognize that early-stage technology investments come with inherent risks, we're driven by the immense potential rewards. We only back those ventures we believe can truly transform the world. We firmly believe that by leading in an industry, you define it—establishing lasting positioning and leveraging network effects that provide a unique edge.

We don't play safe

Our heroes embrace risk, and so do we. To soar, you have to loosen, or even unbuckle the safety belt. Being pioneers in the venture capital arena, we've consistently paved the way while others played catch up. In 1995, when we recognized the potential of the Internet, we boldly committed our next fund to be 100% Internet-focused. This audacious move lost us many investors, yet that fund emerged as the top performer of its vintage.

We invest in our network

Our deep-rooted investments in our ecosystem yield unparalleled proprietary deal flow from diverse channels. Four generations of venture capital wisdom flow through our veins—a legacy that is intentional, not coincidental.

The Draper Venture Network (DVN) enables us to scout and potentially fund groundbreaking ideas globally. Through exposure to a vast array of companies across regions, our judgment has evolved, driving Draper Associates' returns ever upwards. Embodying Metcalfe’s Law, the value of our network amplifies exponentially with every new addition.

Our expansive network serves as a global gateway for our founders. In venture capital, relationships are paramount. We bridge connections among startups, investors, and partners. Through media collaborations and academic ties, our network is the foundation for our portfolio's success.

We love our entrepreneurs

We love founders and are passionate about supporting them in achieving their dreams. Training a hero requires time, effort, and above all, patience. We empower, provide autonomy, and champion their journey in the long run. Our commitment is for the long haul, not for quick profits. Given our unwavering support and long-term perspective, we have become the preferred choice for founders. We believe this approach best helps them reach their full potential.

We look beyond

From the outset, our gaze has been global. We pioneered Silicon Valley venture capital investments in places like China, India, and Estonia, among others. Recognizing early on that venture capital wasn't confined to Silicon Valley or the U.S., we embraced the world as our canvas. The launch of the DFJ Network (now the Draper Venture Network) and the innovative DFJ ePlanet fund further solidified our international stance. This commitment to diverse founders has enriched our perspective and given us a competitive advantage, yielding unparalleled results. Now, we're setting our sights even higher – maybe we will become the first investor in space or the first investors on Mars.

We stay disciplined

We stay true to our principles, steering clear of fleeting trends and avoiding investments based on hype. We know where to play and how we will win. Our disciplined approach, rooted in experience, guarantees our sustained leadership in the industry.

Companies mirror plants in their growth patterns. When nourished appropriately, they thrive; however, over-saturation can be detrimental. Entrepreneurs who receive excess capital may face insurmountable expenses. Just as Spiderman crafts his own suit, we encourage founders to adopt frugality. This same diligence is evident in our investment decisions and organizational ethos.

We ask the stupid questions

We are patient with our capital

We make short-term sacrifices for long-term success. We have a long-term horizon, allowing us to navigate through market cycles with resilience. We think about what the world will look like in 15 years, not tomorrow. Why? Because it takes 15 years to build an overnight success. This forward-thinking approach has steered us through market downturns, collapses, and investor hesitation. Through it all, we've consistently emerged triumphant.

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