“I support the missionaries, not the mercenaries” Tim Draper on his investment strategy

Tim Draper is a modern day Silicon Valley legend. He is a fourth-generation venture capitalist whose grandfather is regarded as one of America’s first VCs. And after decades on Sand Hill Road, Draper opened his own VC firm Draper Associates, on the road in San Mateo. A big fan of decentralizing everything, he recently founded Draper decentralized, a platform for investors to network and access vetted deals. An early investor in some of the most recognizable startups, including Hotmail, Skype and Tesla, Draper stands out for his frequent appearances at startup events around the world.

I met Draper for an interview at Technical BBQ last month in Copenhagen, where he filmed an episode of Meet the Drapers, a self-produced, international version of Shark Tank. Entrepreneurs pitch Draper, his father and sister, as well as a guest jury, in a competition for a million-dollar investment. Danish Aerospace Company Flightwhich produces electrically powered flying cranes with a payload of 440 lb, won the round in Copenhagen and will advance to the final in another episode.

Amy Guttman: How did you come up with the idea Meet the Drapers?

Tim Draper: We did it like a lark, just for fun. It’s my father and my sister and a guest judge. I’ve always wanted to do crowdfunding and I wanted to do a show that the viewer could invest in. We are currently rethinking the crowdfunding to make sure it works. But we had a company called boxabl which, through crowdfunding, has raised $200 million. We’ve started in big markets like India and Brazil and the show is getting underway.

Guttman: Why do you attend so many tech summits like this one?

drape: I learn from talking to people. I meet many and invest in few, but I like to follow up on the people I’ve met at conferences, so I think they get a little benefit.

Guttman: How do you make investment decisions?

drape: I invest in a future I want to see. I believe in the decentralization of everything that can be decentralized. Bitcoin and Blockchain offer the opportunity to decentralize.

Furthermore, I support the missionaries, not the mercenaries. I support the entrepreneurs who are so driven, it is their reason for living. This is all they are going to do with their lives and they have shown me a future that I want. The mercenaries only do it for the money and when the going gets tough, they are the first to leave the ship. We want people who are real captains – willing to go down with the ship, but they will fight through that storm.

Guttman: What drives your decisions about which ecosystems to explore geographically?

drape: We have a nonprofit called the Draper Innovation Index that collects research and data and then lists countries by how good they are for innovators. We also list states in the same order. California has fallen significantly and the US is still barely clinging to the top spot; it is very close between the US, Singapore and Switzerland.

I look at that list and say, not who is the best, although I usually invest in that, but who changes the most? Who creates more freedom and who creates less freedom. Those who create less freedom, I like to pull out and those who create more freedom, that’s where the energy goes.

Guttman: Where do you see that freedom going?

drape: Interestingly, many South American countries are given more freedom, while many South American countries are going into lockdown. I’m excited about El Salvador, Uruguay and Chile has always been great because a president is in office for five years and then can’t be re-elected until he has served a term so he can campaign while in office. I look at those spots and stick my toe in the water.

Guttman: Which emerging markets excite you?

drape: In Africa, I really want to invest in those where they can skip a step. The Central African Republic has now made Bitcoin a national currency. So maybe I’ll go there because they’re going to innovate.

I was jealous to talk to people from El Salvador. I was thinking, you guys are way ahead of us, because they already have smart contracts (self-executing contract written in code stored on blockchain). They can do airdrops (unsolicited mass distribution of cryptocurrency coins used to encourage adoption). I will invest in El Salvador as soon as possible.

Guttman: The work you do at Draper University is perhaps your most important investment. How does that work?

drape: It has been a great success. We have 3,000 students from 102 different countries. We had 5 unicorns start from scratch at Draper University. People come out and say, my life has changed. It’s extraordinary.