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Startup funding evolves online

Young venture capitalist provides three generations of knowledge

Posted: August 24, 2012 2:00 a.m.
Updated: August 24, 2012 2:00 a.m.

Adam Draper speaks to the SCV Startup group in Santa Clarita on Monday about seed investing and online crowdfunding.

 

A third-generation venture capitalist and entrepreneur shared his vision of online crowdfunding and seed investing to members of SCV Startup on Monday night.

Adam Draper is the son of venture capitalist Tim Draper and grandson to William Draper, who is known for starting the venture capital industry for the tech sector. Both Tim Draper and William Draper were founding investors in Skype and William initially funded Hotmail.

Adam Draper has followed in his family’s footsteps by launching BoostFunder, a crowdfunding website for accredited investors only.

As this month’s guest speaker for the local tech startup mentoring group, Adam talked about the evolution of investing and how startups can successfully get money from investors in the seed stage.

Between the venture capitalist era founded by his grandfather to now, the investing culture has shifted from individual to club to network to online network, Adam said. He hopes that seed funding will exist almost completely online within five years, so that investors and startups globally can get connected, as opposed to startups having to rely on time-consuming in-person efforts that sometimes just depends on who you know.

“I want to be the next setup in that evolution,” Adam Draper said of BoostFunder, which calls itself “The Startup Marketplace” on its website.

“No startups actually know how to raise capital because there’s no right way to do it,” Adam Draper explained to the group. “I thought there had to be a way to make the process easier. … it’s so difficult (for entrepreneurs) to round up all these investors.”

Adam Draper has been on both sides of investing and whether online or in-person, he said the main factors in getting seed money from investors are getting them to like you as a person and getting them to look at your product and wish they had thought of it.

“Investing is an emotional decision in seed stage,” he said. “But if you convince one investor, you’ll get 10 percent of the group, be it in a board room with a VC network or online in a website like his BoostFunder.

BoostFunder launched just six weeks ago, with more than 100 startups posted and about $400,000 already pledged from investors and Adam Draper hopes the focus of the website will eventually turn to university-owned incubators helping to raise capital for its resident startups.

Beyond BoostFunder, Adam Draper also started a company called Xpert Financial in 2008 to create a private stock exchange for companies. He left it to focus on BoostFunder.

The successful startups are the ones who realize they aren’t going to become a Facebook or Google anytime soon, even with a successful fundraising campaign.

“You have to love it enough that you have to think you’ll be there still in 10 years,” he said. “You’ll have to make it your life mission.”

For more information about SCV Startup go to www.meetup.com/SCV-Startup.

smitchell@the-signal.com

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