Q&A: Venture Capitalist Tim Draper ‘Still Loves the Decentralized World’
The founder of Draper Associates says his venture capital firm is focusing on investing in startups developing BitcoinFi applications
Blockworks exclusive art by Axel Rangel
Funding for Web3 and blockchain companies may be steadily decreasing quarter over quarter since last year, but one venture capitalist remains as bullish as ever.
Blockworks recently caught up with Tim Draper, founder of early stage venture capital firm Draper Associates, while at Miami Art Week.
Draper is known to be an advocate of decentralization and blockchain technology and a bitcoin (BTC) maximalist.
His most recent tweet in support of bitcoin called for governments to “design software to tax businesses operating in a bitcoin walled garden.” He also called out the FTX crypto exchange for being “centralized around one person.”
Draper told Blockworks his firm opted against investing in FTX and lender BlockFi. He responded to other questions via email.
Blockworks: How has Draper Associates’ capital deployment and investment strategy been affected by the various fallouts that the crypto industry dealt with this year?
Draper: No change. We still love the decentralized world, the Bitcoin Economy, etc. In fact, FTX should clarify that our strategy is sound. FTX was completely centralized (like the central bank), and that puts people’s money at risk. We, of course, still look for new industries to transform, new entrepreneurs who have great vision and new worlds to explore.
Blockworks: Given the potential fraud at FTX, what do you think is the future of centralized finance?
Draper: Gone, and it can’t be gone too soon. I still don’t know why people want to keep their money in dollars, pesos, naira, etc. Fiat currency is centralized too!
Blockworks: You’ve expressed your enthusiasm about the potential of Bitcoin, but how bullish are you on the metaverse and gamified experiences and the companies behind them?
Draper: It all depends on the application. I like that a lot of our world, our work and our governance can all be done in the metaverse, and it is a lot of fun. The COVID lockdowns accelerated our understanding of living in the metaverse, but now, I think we are all moles coming out and seeing the sun again, so there will be a lull in the gaming world while a new, more awesome platform evolves. Then we will be all in.
And, I do expect to see the Bitcoin Economy coming in the next few years: decentralized, open, transparent, perfect record keeping, taxable, with no need for accountants or IRS agents and auditors — because it is all kept on the blockchain.
Blockworks: What is the current sentiment like at Draper Associates when it comes to investing in DeFi or other decentralized applications?
Draper: We love decentralized science (DeSci), decentralized government (DeGov), decentralized real estate (DeRE) and decentralized insurance (DeIns).
BitcoinFi is where we are focusing most of our DeFi efforts. Other DeFi is very interesting if there are barriers to entry.
Blockworks: What advice would you give to blockchain entrepreneurs looking for investment?
Draper: Make sure you are doing it for the right reasons. The money should eventually come from customers.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
