Investment

A Brief History of Venture Capital for Entrepreneurs

January 20, 2015 - As the old adage goes, history often repeats itself, and speculators are always trying to figure out when the next bubble will burst. Entrepreneurs have a lot to learn from venture capitalists and the history and trends that inform their investment decisions. In this blog post, we summarize the history of venture capital as written by Jerry Neumann in this article. Read on for main takeaways and trends by decade - all of which may be a hint of what's to come.

1960s

As technology improved, time truly became an item of luxury. If a venture capitalist moved too slow, that VC might miss out on a deal of a lifetime. VCs knew they had to move quickly not only to keep up with the times, but also to secure deals.

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Lessons of the 1960s

Time is a luxury. It not only affects VCs, but also entrepreneurs. The more VCs you know, the better - meet and stay in contact with as many as you can.

1970s

A change in government regulations allowed pension funds to be considered a “prudent” investment. This spurred change within the venture capital community because VCs were now armed with pension funds as extra money, which they then used to invest in early stage companies.

venture-capital-policy

Lessons of the 70s

You better believe venture capitalists stay up-to-date on government policies, and you should too. Information is power, and past, present, and future venture capital will continue to be influenced by government in some way, shape, or form.

As an entrepreneur, you can use the fact that venture capitalists are getting in early on your company to always ask for help and mentorship. Early VCs will be just as interested in your success as you are.

1980s

Venture capitalists realized what were once top returning sectors were no longer the top returning sectors. Something had to give, and VCs started to invest in different directions and new sectors. Many VCs ended up investing in later-stage companies and already-established markets, thereby going against what they had learned in the 70s about investing in early stage and not heavily established markets.

venture-capital-gem

Lessons of the 80s

Venture capitalists are always looking for diamond-in-the-rough sectors to invest in, but sometimes they accidentally miss them or just aren’t positioned correctly.

1990s

The Internet changed everything. After seeing the early successes of Internet companies like Amazon and Netscape and their IPOs, venture capitalists ramped up investments in Internet companies. An influx of VCs looking to invest meant an influx of money so that anybody and everybody associated with the Internet received investment from VCs.

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Lesson of the 90s

Venture capitalists are human and follow visible trends. If you stay up on the latest trends, you may literally be "following the money" is those trends become a reality. 

Early 2000s

The hype caught up to venture capitalists. Unfulfilled promises sent stock prices tumbling thus defining the 2000s as the era of the dot com crash. However, because of their investments, VCs helped usher in a new era of technology, and their failed investments may have actually helped humanity in the long run.

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Lesson of the early 2000s

Venture capitalists, entrepreneurs, and humans in general make mistakes all the time. Was believing the Internet hype justifiable? In a way, yes, but it did cost a pretty penny. By using and learning from your own and others' mistakes, you can bounce back and ultimately help others.

Late 2000s

Not all was lost in the 2000s. Social media took off like a rocket and created another market for venture capitalists to get into. VCs have backed well-known social media companies that now shape our daily lives and habits.

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Lesson of the late 2000s

Just like entrepreneurs, venture capitalists will fail and fail again until they succeed. VCs were willing to give Internet companies another chance, and it was a good thing they did or we may not have Facebook and Google was we know them today.

Today

There are thousands and thousands of companies in already established markets seeking funding from venture capitalists. If this trend continues, VCs, entrepreneurs, and the rest of the world may face stagnation. VCs are in danger of returning back to the ways they invested in the 1980s.

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Lessons from Today

History seemingly repeats itself at will. Entrepreneurs and venture capitalists must be aware of history and use it to their advantage.

Recap of Lessons Learned by VCs

  • 1960s: Use time wisely
  • 1970s: Information is power and success is more likely with a team
  • 1980s: When opportunity knocks, open the door
  • 1990s: Trends might become future reality - stay at the forefront
  • Early 2000s: Learn from your mistakes
  • Late 2000s: Fail and fail until you succeed
  • Today: Be brave

KeenON: Venture Capitalist and Higher Ed Entrepreneur Tim Draper

December 17, 2014 - Technologist and author Andrew Keen sat down with venture capitalist and higher education entrepreneur Tim Draper to talk about his latest projects. They discussed how Draper University is "turning traditional education on its head" with its innovative entrepreneurship program, and how the next big thing to invest in is Bitcoin. Tim also shares that his biggest mistake was not investing in Google, but it's also the mistake he's most proud of because it has made him a better investor. Read the entire Techonomy article here or watch the interview with Tim Draper below:

Tim Draper on Life Outside DFJ

tim draperNovember 17, 2014 - In 2012, Silicon Valley investor Tim Draper announced that he would be skipping a fund at his venture capital firm DFJ to focus on his newest venture: Draper University of Heroes. One year later, Tim Draper looks back at the best and most challenging aspects of the past year, including his other new initiatives to reboot California's government through Six Californias and why he's taking a bet on bitcoin as the next big thing. Read the entire StrictlyVC article here.

Draper University Alumni Launch "Loopd"

San Mateo, CA – October 16, 2014 – Draper University, the innovative and disruptive school for entrepreneurs, announced that four alumni have launched Loopd, a proximity marketing solutions tool for marketing executives. Loopd closed $1 million in angel funding from Draper Associates and Draper University founder Tim Draper, Salesforce.com CEO Marc Benioff, and Vuclip Co-Founder Xinhui Nui. Alumni Startup Loopd“At Draper University we teach our students to think differently and provide all the necessary tools to start a business. We are thrilled to see four of our Draper University heroes going out into the world and disrupting the traditional way of marketing at conferences and events,” said Draper.

With Loopd, marketers are able to prove event ROI, deliver higher quality leads, gather accurate attendee profiles, optimize event marketing strategies, and enhance attendee engagement. Unlike stand-alone event apps, beacon systems, or traditional lead retrieval systems, Loopd combines the three essential components for an event marketer: a mobile app, event hardware including bi-directional beacons, and rich analytics.

The team of seven is based in San Francisco, CA and Taipei, Taiwan. The chips cost less than $5 dollars to manufacture and can last up to two weeks. The chip also allows users to take notes and export the information received from the app to the user’s sales software, thus making it easier for conference attendees to create contacts rather than solely relying on business cards.

“Draper University changed my life; this is almost an understatement. During my session, I met my two amazing cofounders, came up with our idea for Loopd, and decided to move to Silicon Valley to start my company,” said Brian Friedman, CEO at Loopd. “I would recommend the program with flying colors to anyone and everyone that wants to learn more entrepreneurship.”

Former Draper University alumni are out changing the world – former students have started over 60 companies, raised over $7.4 million in capital, are working at large companies including Tesla and Google, as well as at startups, and attending business school at Harvard and Stanford. Draper University is now accepting applications for its Winter 2015 programs. Application deadlines are at http://www.localhost/sites/html/apply.


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Draper University Online has one of the Highest Course Completion Rates

San Mateo, CA – June 2, 2014 – After running two sessions of its online entrepreneurship program, Draper University is proud to report a completion rate of 51% - one of the highest among online learning programs and, according to data compiled by an Open University doctoral student, nearly five times the average completion rate for MOOCs. Draper University Online“We’re thrilled with our completion and satisfaction rates, both of which are off the charts,” said Tim Draper, founder of Draper University and founder partner of DFJ. “Online education is here to stay, and our online program gives us the reach to changes the lives of aspiring entrepreneurs around the world.”

Draper University Online has received very positive feedback from past students. “Draper University’s online course goes far beyond what is found in a typical MOOC,” said one student. “It would never be possible to get exposure to such an array of experts in a field in a typical university course.”

Beginning this upcoming session, Mr. Draper will also be guaranteeing an investment offer to at least one student of the online school. The investment offer will be for $5,000 at a $2M valuation, or negotiable.

Running in tandem with Draper University’s residential program in Silicon Valley, the online school curriculum covers business basics and startup strategies by using experiential methods unique to Draper University. The online program includes access to a curated selection of past Draper University lectures and a number of live lectures via Livestream. Online students are given individual assignments and teamwork projects to push their imaginations and limits, and have the opportunity to get feedback from mentors (including Mr. Draper) during live office hours via Google Hangouts. Each session culminates with the opportunity to pitch a panel of investors virtually.

The online school has had a diverse population over its first two sessions: 38% female, ages ranging from 18-83, and 13 countries of origin. The countries with the highest enrollment rates (by descending enrollment) are: the United States, China, Argentina, Mexico, India and Japan.

The next online session begins June 23, 2014. Applicants interested in the online school can apply at: http://draperuniversity.com//apply by June 4, 2014.