Tim Draper thinks IPOs are not worth the hassle

Tim Draper, the renowned Silicon Valley investor, Bitcoin evangelist, and a highly in-demand entrepreneur, is apparently anti-IPOs. During the week-long virtual event Unitize, Draper stated that the initial public offerings are not rewarding when it comes to using them for fundraising.

The Unitize Blockchain Conference, being held from July 6 to July 10, is featuring several hotshot investors and prominent names from the blockchain and cryptocurrency industry, including Ethereum’s Vitalik Buterin and Binance CEO Changpeng Zhao. It hopes to bring about a new wave of collaboration and engagement among industry leaders amid these difficult times. 

Don’t go for IPOs, Tim Draper

Needless to add, the COVID-19 outbreak has been hard on a vast number of startups across the globe who are finding it increasingly difficult to reach out to potential investors during lockdowns and travel restrictions. Offering a word of advice to these struggling startups is Tim Draper, who says that IPOs are not worth the trouble for early-stage blockchain startups.

It makes more sense to seek funds from large corporates or use alternative forms of fundraising like tokenization. But pursuing IPOs can be an expensive, time-consuming affair with many regulatory hurdles. Trying to go public wouldn’t be worthwhile when there are ways that are much cheaper, faster, and more efficient.

Tim Draper also added that IPOs are meant for companies with a larger market cap of at least $5 billion. Today, those with only $20 million in revenue, there is no way the process would be rewarding considering all the costs of opening up the financial books for public scrutiny. The firm will be required to shell out at least $5 million to get the regulators on their side, he claimed.

Have a brilliant business idea? We’re listening…

So, if no one is expected to go public, then the investors need another way to cash in on their investments. Thus, offering words of affirmation to young and talented entrepreneurs, Tim Draper said on behalf of his early-stage startup investors Draper Associates and Draper Fisher Jurvetson that the only thing matters is diversity in ideas. Innovation and novelty is the key to bagging large-scale investments today, he ascertained.

It doesn’t matter where you come from, which society you represent, your race, sex, or background. What truly matters is your idea, your passion for it, and how that will benefit the entire community and the market. That’s the only thing we are looking at. If you have it, we’re interested.

About the author