Tim Draper and “Associates” close $190M seed fund

Early investor in Baidu, Hotmail, Tesla, and Twitch raises new capital for early-stage startups

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While startups might be having more trouble than usual raising funds, the same cannot be said for the venture capitalists.

Draper Associates, headed up by well-known Silicon Valley investor Tim Draper, today announced that it has closed a $190 million early stage fund.

In addition to Draper Associates, Draper also founded Draper Fisher Jurvetson (DFJ) and the Draper Venture Network. Through each of these different firms, he became an early investor in several of today’s big-name companies. Some of the most prominent successes over the past few decades include:

• Baidu: Draper was one of the earliest investors in Google search rival Baidu, which saw its share price triple on IPO day. Today, the Chinese Web company boasts a market cap of $65.8 billion.
• Cruise Automation: Draper Associates was one of the backers behind Cruise Automation, a developer of self-driving technology acquired by General Motors a month ago today. Though not officially disclosed, the price of the deal has been pegged at over $1 billion by some reports.
• Hotmail: One of the hottest free email services from the 1990s, Hotmail (backed by DFJ) sold to Microsoft in 1998 for a reported $400 million.
• Skype: After participating in Skype's $18.8 million Series B round in 2004, DFJ saw the digital telephony company sold to eBay for $3.1 billion in 2005. (eBay later unloaded the company, which was then bought by Microsoft for $8.5 billion in 2011.)
• Tesla: DFJ contributed to the growth-stage rounds for Tesla Motors, which saw an impressive IPO in 2010 with its stock surging 41 percent on day one. Today the company boasts a market cap of $32.2 billion.
• Thumbtack: Draper Associates backed local services marketplace Thumbtack in its Series A round. Though the company hasn’t exited yet, it closed $125 million at a $1.3 billion valuation last September.
• Twitch: Draper Associates contributed to video platform and community Twitch's $15 million Series B round in 2012. In 2014, Amazon bought the company for $970 million.

Many of the investments above, touted heavily by Draper as his successes, actually came from DFJ. Though Draper founded the firm (and likely played a role in those early investments), he left DFJ in 2013 to focus on other projects, including Draper Associates.

“We believe that the venture capital business and finance generally is going through a transformation and we raised this fund to lead that change,” said Draper in a prepared statement. “We have created an ecosystem that we believe will give Draper-backed entrepreneurs an edge as they build their businesses.”

A couple recent additions to the Draper Associates portfolio include Younity, a mobile streaming platform that raised an $8 million Series A in December, and The Bouqs Company, an online flower delivery company that closed a $12 million Series B in February.

I reached out to DFJ to better understand the relationship between DFJ and Draper Associates, and received the following background from Josh Stein, a partner at DFJ:

Tim is not an investing partner in DFJ Venture XI or DFJ Venture XII, our last two venture funds. He does however remain actively involved in the management of our earlier funds, is a member of our management committee and is a special limited partner in both XI and XII.

DFJ invests across multiples stages from our two funds/teams. DFJ Venture generally invests $2-10M as a first check, primarily in Series A and Series B rounds (and then continuing to invest later). DFJ Growth is typically writing first checks of $15M+ in companies with significant scale ($10M+ in revenues).

When it comes to Draper Associates, Stein added that he thinks "Tim will be very successful with the new fund. He has a long history of identifying great technology companies at the very early stages. We'd certainly look forward to co-investing with him in a company at some point in the future."

As an aside, Vator is excited to have Stein joining us for Vator Splash Spring 2016 next month. Tickets are still available here.