Tim kicks it off with the good news that the crashing economy has not deterred them from continuing to invest and in fact this is a great time to find unique business opportunities. While his firm is investing in areas such as clean tech and health care, Tim shares his current investment strategy.
He likes ideas that are critical to a new industry or can turn an industry on its ear. He says the media business is now in a typhoon of chaos and thus presenting opportunities.
Draper sheds light on the mystery of fund raising (for the entrepreneur anyway) and admits that it's a mystery to him too! How refreshing! He shares how historically referrals were very important but now with DFJ having a significant global footprint they are looking beyond referrals. Here's the quick process overview:
1. Begin with the business plan which does need to cover some basics. Where does the team come from, their education, is this what they were "meant to do", is the market well understood, and competition analyzed?
2. The first question is whether it's a big enough market - which he stated as the total available market of over $1billion
3. The next cut - what is the approach to this market and how are they going to capture their share
4. Then comes the question about technology and whether it is feasible.
5. Finally, it's time to meet the team and its all about the people. Are the individuals completely driven to doing what they are doing - deep in their soul?
Money should not be a driving factor as much as the fundamental desire to make a change. It's also critical that the team gets along - are they talking over each other or do they have respect for each other. The deal is a driven CEO who is surrounded by people who support and believe in him or her.
Listen in to the interview to hear about their decision process and the key reasons for rejecting a deal.
So how does Tim pick his deals? "It's a feeling driven by a big enough market, where the product is unique, the team is moving ahead and people want to jump on the boat although the masses don't want to do this yet."