Also, our association with Baidu has allowed me to see how Baidu and Google have gone out in very different directions. There was always technology that Google had that Baidu didn’t have. Then Baidu got that technology. Now Baidu has technology that Google doesn’t have. So you are starting to see real innovations happening in China.
I also like Bitcoin. I think it’s a great opportunity for some country to capitalize on the new currency. I also like 3D printing, global positioning technology, drone technology and wearable devices.
Also, China has an opportunity to leapfrog the U.S. on medicine. American has a very old system that the new little companies can’t thrive. China could set up a much more efficient and effective Food and Drug Administration (FDA) so that start-ups can build new solutions to diseases very quickly in China.
Q: You said that missing Facebook is a big mistake you made. Are there any great misses in China?
A: I didn’t go to Shenzhen early enough. (If I did,) I would probably meet the people who started QQ. I’m sorry I missed that one (Tencent).
Q: For DFJ Dragon’s first two funds, the next three to five years will be a key period to realize exits and returns for investors. What’s your outlook for the exit environment?
A: I think the U.S. exit environment is extraordinary going forward. For the next two or three years, I think we are going to have a really good public market.
This will also help some Chinese companies to exit. In China, we have four or five companies lined up to go public in the next year or two.
Q: Lastly, let’s come back to where we are, Silicon Valley. The ten-year average return of U.S. venture capital funds still lags behind the market. Do you think that venture capital firms need another bubble to catch up on returns?
A: Venture capital seems to have 16-year long cycles. They go flat for many years, then you will see extraordinary returns. We had them in 1999. And I think they are coming (back) in the next two to three years.
Q: So you are saying we are at the beginning of another (tech) bubble?
A: Yes, in the U.S. I think we have another three years of really good times for venture capital. In China, I think there will be a one-year lag, then five good years after that.
About Tim Draper:
Tim Draper is founder of Menlo Park, California-based venture firm Draper Fisher Jurvestson. Draper launched the DFJ Global Network, an international network of early-stage venture capital funds with offices in over 30 cities around the globe. Recently, he founded Draper University of Heroes in San Mateo, California.
(Go to the previous page to watch Tim Draper discuss investing in Chinese tech companies.)