Meet the Man Who's Bankrolling Virtual Reality
WHY YOU SHOULD CARE
Because he could be an Arc Reactor away from assembling his real-life Iron Man suit.
By Leslie Nguyen-Okwu
Stepping into startup accelerator Boost VC is like wandering into a secret society for the techerati. The housing entrance is flanked with black-and-white photos of Steve Jobs and Elon Musk. There’s also a bitcoin ATM, virtual reality headsets galore and a Tesla barreling toward you. Wait, make that a “Deskla” — a desk fashioned from the hollow shell of a $70,000 Model S — and Adam Draper is the madman behind the steering wheel.
Venture capitalist princeling Draper has had his eyes trained on the unreal since before the Oculus craze. Boost VC, a $7.1 million fund, focuses on investing between $25,000 and $100,000 in VR companies that go beyond the obvious (gaming). Along with bitcoin and blockchain companies, their portfolio of 45 VR companies worldwide boast a diverse list: education (Unimersiv), tourism (Realities) health care (Fearless VR), messaging and social networks (Beloola). By “getting in early,” says Nicholas Ochoa, former founder of Upload VR, a virtual reality–focused media and events company based in San Francisco, 30-year-old Draper has a “strategic advantage by putting himself at the forefront of the movement in virtual reality.” And it’s a big movement indeed: Venture capitalists and angel investors poured nearly $1.4 billion into virtual reality, up from $35 million in 2011, according to Seattle-based research firm PitchBook.
Draper’s unconventional accelerator can’t just offer early-stage entrepreneurs free lunch and space — because unlike Easy-Bake apps, virtual reality is still encircled by high barriers to entry. “He’s betting on a concept that’s going to take time and money to build out,” Ochoa says. So Draper nurtures his so-called “fraternity of geeks,” a current tribe of around 20 early-stage virtual reality and bitcoin startups, in their infancy: with rooms full of bunk beds, a work space with unlimited Red Bull and access to VCs from Silicon Valley’s highest echelons like Andreessen Horowitz to share their wisdom, and hopefully, dollars during their three-month stay.
So far, the who’s who of VR have all dropped by to visit Boost VC in San Mateo, California: Oculus, HTC and Samsung (Oculus declined to comment, whereas HTC and Samsung didn’t respond to requests for comment). Past Boost VC alums, including Janus VR and Casino VR, have gone on to raise a combined total of $140 million after the accelerator program. Janus VR CEO James McCrae says, “Adam is not shy about wishing any Boost VC tribe member to be a cockroach” — in startup lingo, that means to have a scrappy, resilient mentality. In Janus VR’s early days, Draper facilitated dozens of introductions for McCrae and fine-tuned his “shoddy” elevator pitch.
But with four virtual reality unicorns on the scene valued at $1 billion or more — Magic Leap, Oculus, Blippar and MindMaze — virtual reality analyst Nizar Tarhuni doubts more will come anytime soon. “The market remains too premature,” says Tarhuni. “You see all the buzz about the cool technology, but you still have a lot of pieces that you don’t necessarily know will stick.” Plus, bigger players are quickly rising, with HTC Vive’s $10 billion Virtual Reality Venture Capital Alliance. “There isn’t a blueprint for how to do a VR company yet,” says virtual reality expert Robert Scoble. “There is no customer base. There is no pattern. There are no benchmarks, and there’s going to be a greater number of losers than the VC industry is used to.”
Draper is the sort who seems unfamiliar with the very concept of loser-ness. He comes from Valley elite stock. His father, Tim Draper — who amassed his fortune with opportune investments in Tesla, Skype, Twitch and Baidu — sits just upstairs from Boost VC, in the same building. Adam’s younger brother, Billy Draper, is also an investor, and also works one floor up at Draper Associates. And occasionally, grandfather William “Bill” Draper III drops in — he launched heavyweight Sutter Hill Ventures in 1962, which now boasts 17 IPOs and 51 acquisitions to date. And before him, Adam’s great-grandfather William H. Draper Jr. started one of the first Silicon Valley venture firms ever, Draper, Gaither & Anderson, in 1958. At home, he says, “entrepreneurs were heroes” and dinner-table talk revolved around sleek new startups at the time … like Hotmail.
Boost VC is Draper’s third experiment. Previously he founded Xpert Financial, an online exchange for private company stock, in 2009, and served on the board of Enders Fund, a gaming developer, in 2010. After settling millions of dollars in private security transactions and becoming a registered broker dealer, Draper was already a full-fledged angel investor and served on a number of boards by the time he graduated from UCLA with a degree in English. In that time, he found his calling in advising young entrepreneurs and decided to start “mentoring in bulk” — et voilà, with some assistance from pops and grandpa, who are limited partners for the fund, Boost VC was born. Today, Draper’s portfolio of investments is currently valued at more than $1.5 billion.
He is certainly playing a long game. “I’m sort of just building my Iron Man suit — eventually we’re just going to have straight-up space jet packs,” Draper says. He’s not totally kidding: You may find Draper absorbed in his HTC Vive headset during his usual hourlong bender with Space Pirate Trainer, a VR alien laser attack game. It happens so often, Draper says, that his fellow coworkers have to cut him off every once in a while. “It’s significantly awesome,” he says, in tech-prince patois.