Like his father and grandfather before him, Tim Draper has made a name for himself in venture capital. In 1985, the third generation Draper formed his own firm by restructuring an SBIC (Small Business Investment Company) that had been designed by his father, William H. Draper III. Since then, DFJ has grown to $1 billion in investment capital under management, and has established itself as a leader in technology investing, particularly in the Internet. Since inception, DFJ has funded over 55 Internet ventures.

Investment strategy: swing for the fences

Firm literature says simply: "We focus on information technology businesses with enormous market potential." However, unlike some of its competitors, DFJ hasn't gotten caught up in the scramble for the biggest deals - the firm sticks by its commitment to entrepreneurs by limiting itself to early stage investing, particularly at the seed and start-up stages. Managing director Steve Jurvetson, who claims to read 50 to 60 business plans a week, told Business 2.0: "There's far more excitement in what's not known. The energy and charge comes when you feel an idea starting to come into light." Jurvetson continued his enthusiastic spiel by stating, "You want to find an idea that's unlike anything you've seen in the last few months." In some instances, such a philosophy means taking on opportunities passed up by others. For example, Hotmail - one of Jurvetson's home runs - was turned down by 21 other firms before getting funding from DFJ. Portfolio: nine types of tech, plus one wicked ale DFJ divides its portfolio into ten different categories: Internet companies (Garage.com, GoTo.com and Net Zero), intranet and extranet (AppStream, Chili!Soft), e-commerce (Wit Capital and fogdog.com), photonics (Cyras Systems, Photonic Power), communications (ALOHA Networks, I-Cube), software (Chroma, Right Point), semiconductors (Cognigine, NeoParadigm Labs), information services (Upside), computer (Qume Corp.) and a "grab bag" category (Pete's Wicked Ale).

Venture capital for the masses

Recently, DFJ has expanded its reach in several ways. In December 1999, the firm announced a venture capital fund open to smaller investors. DFJ filed a registration statement for the new $500 million fund, named MeVC Draper Fisher Jurvetson Fund I, which describes the fund as a business development company. Twenty-five million shares of the new company will be sold to the public at $25 to raise the $500 million. According to The Business Journal, "Observers say the venture capital IPO would be extremely rare, if not the first of its kind." While VC has traditionally been open only to very wealthy individuals, the MeVC DFJ fund is open to individuals with as little as $150,000 in net worth. The minimum investment is $5,000, but the fund prohibits investors from risking more than 10% of total net worth.

The fund's announcement was met with some skepticism by VC industry analysts. Venture capital funds are almost never under-funded, so observers wondered why DFJ would go out of its way to attract new investors who are outside the normal VC pool. The answer may be altruism. "We want to allow the small investor the chance to participate in this important driver of the U.S. economy," Draper told Red Herring at the time of the announcement.

DFJ also physically expanded its scope of operations, creating a New York affiliate dubbed Draper Fisher Jurvetson Gotham in February 2000. The company has additional affiliates in Utah and Alaska, and invests in Indian companies through Draper International. "Draper Fisher has been on the forefront of VCs, taking advantage of all venture activity outside of Silicon Valley," DFJ Gotham managing partner Ross Goldstein told Red Herring in February 2000. DFJ Gotham had raised about half of its stated goal of $100 million dollars by the time the firm officially opened. Its first investment was in mimeo.com, a New York-based Internet firm that provides copies and reproductions of documents sent online.

Partners: Jurvetson mania

Timothy Draper founded DFJ after a stint at Alex. Brown & Sons, where he worked in high-tech corporate finance. Partner John H. N. Fisher also worked at Alex. Brown. Finally, while all of Draper Fisher Jurvetson's managing directors receive ample praise for their accomplishments, Steve Jurvetson has soaked up some of the finest press available. Hired directly from Stanford Business School, Jurvetson's name was tacked onto Draper Fisher within a year. With his investments in Hotmail and Four11, Jurvetson brought the firm over $200 million in two years. "What attracted me to Hotmail was intuition," Jurvetson told The Financial Times. Sabeer Bhatia, founder of Hotmail, praised Jurvetson in comments to POV. "Jurvetson had the vision to see how the Internet would pan out," Bhatia said, adding, "He's definitely a VC and not just a fund manager."

"Our management style is flat, non-hierarchical, laid-back, non-conventional" Jurvetson told FT. "We want to foster a 'childlike' mind, open to new possibilities and new markets. We are a partnership and each of us has an equal voice in the firm's governance."