How Did Tim Draper Make His Money?

How Did Tim Draper Make His Money? Tim Draper is an American venture capitalist and investor who made media headlines in 2014 for buying the seized bitcoins from the Silk Road website in a US Marshals Service auction. But he’s been involved in a lot of major investments over the past three decades. In fact, he was an early investor in Hotmail, Baidu (BIDU), Skype, Tesla (TSLA), and more.

Draper comes from a family of venture capitalists and government officials. His grandfather William Henry Draper Jr. was the first ambassador to NATO, and his father was the founder of an investment firm and chairman of the Export-Import Bank of the United States.

These days, he’s known for being a big supporter of decentralized finance more than his short-lived reality show. Draper University serves as an incubator to find new ideas, and he tends to invest on the cutting edge of technology. This has historically been a double-edged sword. It has produced enormous riches but it has also led to numerous legal battles.

Who Is Tim Draper?

Draper graduated from both Stanford and Harvard.

He started his career as a marketing engineering intern at Hewlett-Packard. As soon as he graduated, he dove into venture capital, and started his own firm by 1985. 

It’s through this firm that he became an early investor in Hotmail. Draper’s reputation was enhanced by growing the email company through the first viral marketing campaign on the internet. From there, he invested in a string of technology companies, many of which have become massive successes.

This is how Draper inevitably grew his wealth and power as a titan of investing. He leveraged his successes to make the purchase that ultimately cemented his legend – Bitcoin. Of course, he didn’t stop there – Draper is a huge proponent of cryptocurrency and invested deeply in the Tezos project too.

How Did Tim Draper Make His Money?

Draper focuses heavily on investing in emerging companies. In fact, he even launched the Draper University of Heroes to help foster entrepreneurialism in the United States. He’s made hundreds of investments in companies through his VC firm, but a large portion of his fortune came from cryptocurrency.

Draper bought 29,656 bitcoins confiscated by the U.S. Marshals for a total of $18.7 million, which comes out to $632.00 per coin. At prices over $30,000 per BTC, his crypto fortune alone is valued over $1 billion.

Of course, Draper University is also a for-profit school, which means he’s generating income from that too. It launched over 280 startups with well over $51 million in funding from outside investors. And he’s a successful author who sells books discussing finance along with speaking engagements, consulting, and more.

When all is said and done, Draper is a very wealthy man, even without his crypto fortune.

What Has Tim Draper Invested in?

Draper is best known for his cryptocurrency investments, but he’s also a long-time investor who got in on the ground floor of a lot of companies since Hotmail’s infamous sale to Microsoft Corporation (NASDAQ:MSFT). 

Some notable companies he invested in include Baidu, Skype, Robinhood, Focus Media, Twitch, Box (BOX), Cruise Automation, Planet, SpaceX, Athenahealth, and Tesla (TSLA). While many of these seem like obvious investments now, they weren’t when he got in during the early stages.

He also has investments in Bitcoin, Tezos, and the Ledger cryptocurrency wallet, among others. He’s an active crypto trader with a reportedly significant allocation to altcoins.

But not everything Draper invests in becomes a giant – many of his investments fail. Most notably, his investment in Theranos was a bust when founder Elizabeth Holmes was found to be running a defunct company.

In spite of the wide variety of bets he’s made, one in particular catapulted him into the elite group of world’s billionaires.

Is Tim Draper a Billionaire?

Draper is worth approximately $1.5 billion, based on his investments, businesses, and cryptocurrency holdings. This makes him one of the wealthiest people in the world and ranks him somewhere around 2,000 on the list.

Over $1billion of his net worth came from Bitcoin. He diversified his crypto holdings and bought deeper into projects like Tezos, which initially embroiled him in controversy. Tezos spent a long time in legal battles before finally re-emerging as a legitimate crypto contender.

This diversification both in and out of crypto is what helps Draper maintain his wealth. But why is he so bullish on cryptocurrency when so many other investors are vocally against it?

Why Does Tim Draper Like Cryptocurrency?

Draper has a very positive outlook on blockchain and digital currencies. Even his harrowing experience with the Tezos team couldn’t dampen his enthusiasm for the industry as a whole. In fact, he openly states that cryptocurrency represents freedom and a superior alternative to legacy financial systems.

He even issued a bullish price prediction of a $250,000 bitcoin price by the end of 2022. This is one of the most optimistic outlooks, although the skyrocketing price in the coronavirus pandemic’s wake signals that this could be a real possibility for the believers.

Cryptocurrencies are notoriously volatile, and it’s important to understand that even if he’s right, the path to new heights could be fraught with furious price declines. Nevertheless, it seems more likely that the bitcoin price will reach $250,000 than that it will drop back down to $600 per coin. 

Clearly he has a stake in the price rising and you buying in. That doesn’t mean it’s a bad investment though – crypto outperformed much of the stock market in 2020 and the first half of 2021, and ever more debasement of fiat currencies could be the spark that ignites digital currencies to new, higher highs.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.