Draper Fisher Jurvetson

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Draper Fisher Jurvetson

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Contact Information
Draper Fisher Jurvetson
2882 Sand Hill Rd., Ste. 150
Menlo Park, CA 94025
CA Tel. 650-233-9000
Fax 650-233-9233

Type: Private
On the web: http://www.dfj.com
Employees: 39

Venture capital firm Draper Fisher Jurvetson (DFJ) provides early-stage operating capital to startup firms. It has traditionally focused on information technology segments as Internet applications and services, semiconductors, telecommunications, and networking software, but has expanded its focus to include life sciences and clean energy technologies. Since 1985 the active investor has backed more than 300 companies, including such Internet hits as Hotmail (acquired by Microsoft), Skype (acquired by eBay), and Baidu. The company has more than 30 offices and maintains a network of more than a dozen affiliates that seek out deals in the US and abroad. DFJ manages some $4 billion in committed capital.

Key numbers for fiscal year ending December, 2008:
Sales: $4.8M

Officers:
Managing Director: Timothy C. (Tim) Draper
Managing Director and CFO: Mark J. Greenstein
Network Associate: Marta Bulaich

Competitors:
Benchmark Capital
Hummer Winblad
NEA
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Company History:
Draper Fisher Jurvetson
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Company Perspectives

DFJ's mission is to identify, serve, and provide capital for extraordinary entrepreneurs anywhere who are determined to change the world.

Key Dates

* 1985: Timothy Draper establishes Draper Associates.
* 1991: John Fisher becomes a partner.
* 1995: Steve Jurvetson is named firm's third partner.
* 1999: European and Asian funds are offered through ePlanet affiliate.
* 2005: Firm enjoys major successes with Skype and Baidu investments.
* 2007: London-based Esprit Capital Partners becomes European affiliate.

Incorporated: 1985 as Draper Associates
NAIC: 523999 Miscellaneous Financial Investment Activities
SIC: 6289 Security & Commodity Services Nec; 6799 Investors Nec

Based in Menlo Park, California, Draper Fisher Jurvetson (DFJ) is a venture capital firm focusing on start-up companies involved in emerging markets offering fast growth. More than just looking for diamonds in the rough, the firm focuses on entrepreneurs who want to change the world. Areas of interest include information technology, Internet applications, wireless services, semiconductors, data communications and bandwidth enhancements, nanotechnology, life sciences, and clean energy technologies. Among DFJ's most successful investments are Hotmail, Skype, and Baidu. In addition to its main investment funds, the firm has expanded its reach globally through a network of affiliated funds totaling about $5 million in capital commitments. Through these funds, DFJ maintains a presence in 30 cities around the world.

Draper Family, Post-World War II Venture Capital Pioneers

DFJ was founded by Timothy C. Draper, a third-generation Silicon Valley venture capitalist. As undersecretary of the Army, his grandfather General William H. Draper, Jr., had played a key role in administering the Marshall Plan following World War II, helping to revive the economies of Germany and Japan. He retired to what became Silicon Valley in the 1950s. He formed something of an investors club to back some of the technology spinoffs of Hewlett-Packard and Fairchild. In 1958 he founded the first West Coast venture capital firm, teaming up with Rowan Gaither, who had started Rand Corporation in Santa Monica, California, and retired Air Force General Frederick L. Anderson to form Draper, Gaither & Anderson. A year later his son, William H. Draper III, joined the firm and after three years teamed up with Franklin "Pitch" Johnson to start a new investment firm, Draper & Johnson. The younger Draper then launched Sutter Hill Ventures in 1965, becoming an early backer of such companies as Apollo Computer, LSI Logic, and Quantum. He managed the firm until 1981 when he quit to join the Reagan administration in Washington, D.C., becoming chairman of the U.S. Export-Import Bank and CEO of the United Nations Development Program. He had been among the first users of a limited-partner arrangement that proved to be a key development in the rise of the modern venture capital system. Under this structure the venture capital firm served as the general partner, receiving a management fee and slice of the profits, while the limited partners--banks, insurance companies, and other institutional investors, in addition to wealthy individuals and families--supplied the capital. Draper resumed his venture capital career in 1995, launching Draper International to focus on investments in India.

Tim Draper graduated from Harvard Business School in 1984. "The last thing I wanted to do was to get into the same business my father and grandfather were in," Draper told the San Francisco Chronicle in 2005. "I wanted to start a business, but when I was coming out of business school, I realized that starting a business was going to be limiting because I had ideas for a thousand different businesses. One was going to be video on demand, and one was going to be submarines." At the same time, he felt pressure to find a job after graduation and took a position at the investment bank Alex. Brown & Sons, splitting his time between investment banking and venture capital. Dissatisfied with investment banking, after two years he left to launch an investing career, establishing Draper Associates, and initially raising funds by borrowing against family assets. He was also able to borrow $6 million from the U.S. Small Business Administration (SBA). Altogether his first fund, Draper Associates/California Partners, was capitalized with $8 million. The fund struggled in the early years to score successes and after three years Draper was on the verge of losing the backing of the SBA. "I flew to Washington," Draper told Venture Capital Journal, "and said, if you just hang in there for another year, we'll be able to pull this thing out." Saving the day for Draper Associates was an investment in Parametric Technology Corporation, a cutting-edge computer-aided design software company. Draper's investment of $270,000 was returned 500 times when Parametric was taken public in 1989 and became the most successful initial public offering (IPO) of the year. Several more profitable IPOs followed in 1990, including Digidesign, maker of digital musical editing systems. As a result, the fund that had been on the brink of disaster turned into the best performing fund of its type.

Fisher Joins Draper: 1991

Flush with success, Draper prepared to launch an even larger fund in 1991 and recruited a partner to help him. He tapped a former colleague at Alex. Brown, John H. N. Fisher, who had graduated magna cum laude from Harvard College and earned an M.B.A. from Harvard Business School. In addition to a stint at Alex. Brown, Fisher worked at Bank of America before joining Draper. According to a 1999 Forbes profile of DFJ, Fisher became the firm's straight man while Draper supplied the personality. He was "a guy known for showing up at board meetings dressed as a clown and skiing in blizzards in nothing but boxer shorts." As for Fisher, according to Forbes, "Not a week goes by when he doesn't challenge the other partners to slow down. 'I'm the yin to Tim's yang,' he says."

In 1991 Draper and Fisher launched the Draper Associates II fund, which enjoyed a strong run. Some of the most notable successes of the $20 million fund included Medior, a user-interface design company acquired by AOL; Combinet, maker of ISDN remote-access networking products, acquired by Cisco Systems Inc.; Cybermedia, an Internet company that merged with Network Associates; Software Quality Automation, which was taken public; T/Maker, a PC software company, sold for cash to Deluxe Corporation; and Convoy Corporation, provider of application integration software for PeopleSoft applications, acquired by New Era of Networks Inc. (NEON).

The third principal of DFJ, Steve Jurvetson, introduced himself to Draper and Fisher by way of letter in late 1994. At the time he was a second-year business student at Stanford University. Earlier he had completed an undergraduate degree in electrical engineering at Stanford in just two and a half years while graduating at the top of his class. He then earned a master's in electrical engineering at Stanford and worked as a consultant with Bain & Co. before enrolling in the Stanford Business School M.B.A. program. The obvious intelligence and enthusiasm of the letter writer piqued the interest of Draper and Fisher, who invited Jurvetson to their offices to chat. Despite the young man's lack of investment experience, they quickly realized they had met a technologist who could play a key role with the firm's next fund, Draper Fisher Associates III. The 28-year-old Jurvetson joined the firm in 1995, and quickly proved his worth. In just six months he made partner. For the firm's third fund, which raised $50 million, he helped in the decision to invest in Internet companies Four 11, provider of Internet white pages, and Hotmail. The latter investment was an accident in some respects. Hotmail's founder, Sabeer Bhatia, had pitched to them a company called JavaSoft, maker of web database tools, already rejected by about 20 other venture capital firms. DFJ was on the verge of passing as well when the partners asked if Bhatia and his team had any other ideas. As it happened, they did: free e-mail.

DFJ liked the concept and quickly agreed to invest $300,000 in what became Hotmail. The Internet venture also pioneered the concept of viral marketing, the web's version of word of mouth. It was Tim Draper's idea to include a linked message ("Get your private, free e-mail at http://www.hotmail.com ") at the bottom of each e-mail delivered by Hotmail. He claimed to have actually wanted the message to read: "P.S. I love you. Get your free e-mail at Hotmail," which he hoped would also spread good cheer around the world as well as promote Hotmail. In any event, as Hotmail users began sending e-mails, many of the recipients clicked on the link to obtain their own free accounts, and sent more messages that spread the Hotmail application in ever widening circles. Hotmail was sold to Microsoft in 1997 for a reported $400 million, presenting DFJ with a sizable profit.

A fourth fund, which raised $90 million, was launched in 1997. Many of the early investments were Internet plays but by 1999 the company's interests, especially Jurvetson's, were turning in other directions. While attending a conference at the Foresight Institute, Jurvetson learned of the advances being made in nanotechnology and became smitten with the field's potential. A decade earlier he had taken a course with K. Eric Drexler, who had coined the term "nanotechnology" in 1986 and was the founder of the Foresight Institute. While the idea of building machines to manipulate molecules had always been attractive to Jurvetson, he was stunned by the advances that had taken place in such a short time. According to Forbes, "He began reading everything he could find on the subject, telling his partners he wanted to see any business plan that proposed to exploit nanotechnology." Under Jurvetson's direction, DFJ became the backer of nanotechnology start-ups, investing nearly $50 million in 13 companies over the next three years.

In the late 1990s DFJ sought to become the first of the Silicon Valley venture firms to gain a national and global footprint, rather than be content to limit itself to local investments. The firm in effect franchised its venture model, establishing affiliates in Alaska, Colorado, Oregon, Texas, and Virginia. An international vehicle, London-based DFJ ePlanet, was formed in 1999, leading to the opening of offices throughout Europe and Asia.

A Pair of Hits: 2005

While DFJ was building a stake in the nanotechnology field and spreading its reach across the oceans, it had to contend in the new century with the aftermath of the technology meltdown in the stock market, especially the numerous failures among Internet ventures. The flamboyant Tim Draper made an easy target for the naysayers. In a 2001 article in eCompany Now, Draper was singled out as one of the "dumbest" venture capitalists in Silicon Valley. Draper accepted the criticism in good humor, but in truth he was better known for dressing up as Batman, arriving at a party riding an elephant, and other antics than for his investment success stories. While his firm scored some nice paydays, they had yet to land a massive one. That lack would be remedied and then some in 2006 when Tim Draper was able to polish his reputation. In addition, the firm's effort at globalization proved its worth. In a single month in 2005, DFJ was involved in two major deals. One was the $4.1 billion sale of Skype, a European Internet telephone company, which returned a sizable profit on the firm's investment of about $14 million. DFJ invested a similar amount in Baidu, a Chinese Internet search engine. Baidu was taken public, raising $109 million, and once the shares began trading, their value increased more than 350 percent on the first day, giving DFJ a stake worth more than $500 million.

DFJ and ePlanet went their separate ways in 2005, leaving an international void in DFJ's operations. The firm began to rebuild its global network of affiliates and took a major step in August 2007 when it forged a deal with London-based Esprit Capital Partners, which became a part of DFJ's affiliate network. Plans were also in the works to extend the network to such countries as India, Israel, Japan, Korea, Russia, and Turkey.

Principal Competitors

Benchmark Capital Management Co., L.L.C.; Hummer Winblad Venture Partners; New Enterprise Associates.

Further Reading

Alexander, Jan, "Prince of Silicon Valley," Worth Magazine, July 1, 2007.

Corcoran, Elizabeth, "Mr. Nanotech," Forbes, June 23, 2003, p. 128.

Foremski, Tom, "Living in the Golden Age," Financial Times, May 5, 1999, p. 7.

Harris, Scott, "The Education of Tim Draper," Industry Standard, October 16, 2000, p. 173.

Kroll, Luisa, "The Wild Bunch," Forbes, May 31, 1999, p. 122.

Lashinsky, Adam, "Venture Capital Is Not for Girlie Men," Fortune, October 17, 2005, p. 38.

Loizos, Constance, "Why Tim Draper Feels Like Captain America," Venture Capital Journal, February 2006.

Marshall, Matt, "Silicon Valley Lives Changed by Globalization: Financier's Global Vision Leads Way," San Jose Mercury News, December 28, 2005.

"On the Record: Tim Draper," San Francisco Chronicle, March 13, 2005.

"Top of the World: How Steve Jurvetson and Four More Broke into Venture Capital," Red Herring, June 12, 2006.

— Ed Dinger


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Wikipedia:
Draper Fisher Jurvetson
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Home > Library > Miscellaneous > Wikipedia

This article is about the venture capital firm. For the former country, see Democratic Federal Yugoslavia (DFY, or DFJ).

Draper Fisher Jurvetson Draper Fisher Jurvetson Partners
Type Private Ownership
Industry Private Equity
Founded 1985
Founder(s) Timothy C. Draper
John H. N. Fisher
Steve Jurvetson
Headquarters Menlo Park, California, United States
Products Venture capital
Total assets $4.5 billion
Website www.dfj.com
Draper Fisher Jurvetson - Silicon Valley Office

Draper Fisher Jurvetson (DFJ) is a venture capital firm based in Menlo Park, California with affiliate offices in more than 30 cities around the world and over $4.5 billion in capital commitments.

The firm has funded well-known technology companies including Hotmail (acquired by Microsoft), Overture (acquired by Yahoo), Skype (acquired by eBay) and Glam Media. Other notable investments include Tesla Motors, SugarCRM, Technorati, Interwoven, Meebo and Baidu among others.

DFJ was founded in 1985 by Timothy C. Draper and John H. N. Fisher as Draper Associates. Draper and Fisher left Alex. Brown & Sons, where they were officemates. The firm's current name is attributed to Draper and Fisher as well as co-founder and managing director Steve Jurvetson.
Contents [hide]

* 1 Network
o 1.1 DFJ-branded affiliates
o 1.2 Other affiliates
* 2 See also
* 3 External links

Network

DFJ maintains a loosely affiliated network of semi-independent venture capital firms in the U.S., Europe, Asia and Latin America.
DFJ-branded affiliates

* DFJ Athena Korea - Seoul, Korea
* Draper Atlantic - Washington, DC
* DFJ DragonFund China - Shanghai, China, San Jose, California
* DFJ Element - Radnor, Pennsylvania
* DFJ Esprit - London, England
* DFJ FIR Brazil - São Paulo, Brazil
* DFJ Frontier - Portland, Oregon, Sacramento, California, Santa Barbara, California
* DFJ Gotham -New York, New York
* DFJ Growth Fund - Menlo Park, California
* DFJ Mercury - Houston, Texas
* DFJ New England - Boston, Massachusetts
* DFJ Polaris - Anchorage, Alaska
* DFJ Portage Ventures - Chicago, Illinois
* DFJ Tamir Fishman - Tel Aviv, Israel
* Draper Triangle - Cleveland, Ohio, Pittsburgh, Pennsylvania
* DFJ VTB Aurora - Moscow, Russia
* DFJ VinaCapital - Ho Chi Minh City, Vietnam

Other affiliates

* Access Ventures - Austin, Texas, Denver, Colorado
* Element Partners - Radnor, Pennsylvania
* Timberline Ventures - Seattle, Washington
* Watasch Ventures - Salt Lake City, Utah, Albuquerque, New Mexico
* Zone Ventures - Los Angeles California

See also

* Draper, Gaither & Anderson
* Draper Richards

External links

* Official site
* Tim Draper speaks at Stanford, video
* Element Partners

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