How This $200M Investor Finds the Next Billion-Dollar Idea

I was an investor in the first company that created AR glasses they became Snapchat spectacles I was an investor in coinbase which is the preeminent Gateway for cryptocurrency investor in amplitude which was the mobile first analytics platform in this episode of emerging founders with manav we're going to be talking to Adam Draper founder and managing director of boost VC they're the most active deep Tech investor on the planet averaging one deal per week Adam has been investing for the last 12 years his a average check size is 50k to 500k and in this episode he tells stories about how he met Brian Armstrong how he got invested into companies like coinbase and a bunch of other unicorns Adam also breaks down a lot of his writing so stick around till the end because there's a lot of nuggets of wisdom in this podcast I'm really excited to have you on the show Adam how are you doing today hey thanks for having me on the show manov my name's Adam Draper and boost PC is the preed fund for deep Tech we are averaging a deal a week typically we like to be the first check writer so we write $500,000 checks into precede rounds and we try to just specialize on The Cutting Edge of amazing Founders trying to solve hard problem amazing and how did you end up deciding like deep Tech is the vertical you want to go after I've always done deep Tech is a real answer I was an investor in the first company that created AR glasses they became Snapchat spectacles but it was was called virgin slabs I was an investor in coinbase which is the preeminent Gateway for cryptocurrency investor in amplitude which was the mobile first analytics platform and so really the answer is just like the types of deals that get through the filter have to be insane to get to me I was 26 when I started to invest in startups the companies that get through the filter of like the governments big corporations traditional Venture firms and then I get to see the deal like if it's a classically good idea those three groups should have picked it up and invested and so I've just always spent time on the things that drip through that filter those happen to be the things that end up changing our world and that's special I mean investing in coinbase seems like a no-brainer right now 40 million plus Americans own crypto but when you were investing in coinbase what was the conviction or what was the story behind that deal I have so much to thank Brian Armstrong's for so I hadn't heard of Bitcoin when I met Brian Armstrong what year is that 2012 he was on a list of companies and I reached out to him and it was like hey my name is Adam I invest in some startups I proved it by writing a couple startup names and to his credit he took the meeting we met he didn't lead with Bitcoin which was great and different than everyone else now he said at some point the world is going to be on One Financial infrastructure and that saying made sense to me so at that time like people were on Skype Zoom wasn't a thing yet you were able to call anyone in the world but you weren't able to pay anyone in the world so there were all these Gatekeepers for you to be able to pay and I was like yeah that makes sense if venmo was just starting to like be a thing like there weren't really Financial tools to be able to like transact easily and then the second thing that resonated and rings in your ear we it is he said very rationally he said this could be a trillion doll opportunity and he didn't mean him he meant like Bitcoin holistically like and he was wrong it's already a$2 trillion opportunity and like it's ever growing every day and so I ended up sitting on it for a while I didn't make the decision immediately it turned out he had met a hundred other investors and like no one had said yes basically and and that was the seed round basically this is the seed round yeah yeah yeah and so one day I'm thinking about this decision and I'm reading an Economist magazine on the toilet and it's a 2011 magazine and it said Bitcoin Bubble Burst question mark and I've read it a ton of times but I've never seen this article and so I'm reading through this article I'm like this is saying that the bubble burst and it went down to $2 from $30 but the price is already back at 10 like someone wants this technology to exist and so I call him and I'm like I'm in and he said for how much and I was like I don't know and so I ended up investing in coinbase and one of the things that he did that a lot of people don't do after you invest is he actually called me and he said hey you're in thank you so much I really appreciate it so I think everyone should call their investors like it I remember it like it's rare enough that I remember his call during that call was he tried to upsell me on buying Bitcoin also so I had not bought any Bitcoin yet I was just betting on a guy I thought was really impressive and I was like hey Brian I just kind of invested in you I'm not going to put up more money at this moment it was 10 bucks per Bitcoin that would have been the best investment I ever made I want to segue that into like the founders because this show is called emerging Founders I want to talk to you about like if I'm a Founder building in DTE I'm building a humanoid robot company like I'm trying to approach investers like what are you looking for like when you talk to people like what kind of qualities are you looking for what kind of Attraction do you look for like how do you you filter I find that my favorite Founders are the people who are really good at bringing their walls down they're non-defensive all the time because they're self-confident in what they're able to do and kind of listening for that little bit that might get them an edge like they're listening they believe that knowledge could come from any direction so what I look for is someone who is willing to take on a monstrous challenge like just huge challenge so you need to be able to Define what that challenge is what you are doing how you are doing it what you need help with like all those things and people can ask specific questions of help or whatever generally get further so you're like you're looking for someone who really understands what they're asking for and what they need what we're trying to identify in a pitch session is the moment the person became inspired to start a company and if they know the energy source of why they are building the company that they're building and so like you're trying to figure out where that is and why that is and so we back companies that have you know a million dollars in Revenue off of a software product and we back companies that might not have a product for 6 years but they do need to have an idea of how it will get funded and they need to have obsessed over it for long enough that they really are intimately familiar and they can explain nuclear Vision to me Founders have great clarity they're able to explain very complex things very simply from my perspective like my goal is to figure out what risk I'm taking when I invest and so you need to narrow my risks down you have to be able to explain like why I'm minimizing my risk a little bit and why I should be excited about what you're doing and that you're going to be able to build it I don't like when people think about oh and then I'm going to raise the series a and I'm like you don't know who you are yet like you haven't figured out what this company is yet and those are tough for me where it's like oh yeah and that's coming up next and it's sad that isn't how it works it works when you earn it I was reading your newsletter and this term like really stood out for me you said there is no lion in the bush you want to expand on that me and my friend Colin West who runs Ensemble Ventures whenever we get together we talk about how the Universe works it's like a common theme of like all of our conversations but there's one term that we always talk about which is there's no Ling in the bush and it's when you encounter a decision making I find a lot of people who run into a decision and they know they would like to take the risk however they feel the better option is the safe option because it's more certain and we evolved over a period of time where there was a time frame when you heard a russle in the bush there was an actual lion and we evolved over time as a society where lions are not the problem in the bush and so we as a society actually invent a lot of things to be afraid of that aren't really big deals and whenever Colin and I are together me with anyone but when Colin and I are together and I'm thinking through like doing or not doing something we both have this like Mantra of saying there's no Lon in the bush it enables you to make the highrisk decision easier like it makes you realize what the actual thing that could happen is one thing so one thing I want to be clear on is like Adam actually wrote an article on this and he mentioned like the journey took them like 8 to 9 years to get to a point they are at right now or like few years ago I want you to talk about like first seven eight years of grinding the storm that's like the life is in the beginning of starting Adventure so the article you're referring to I wrote called nothing nothing nothing something and really when we started boo VC we had 0 under management oh well we had $500,000 under management that we had raised for a crowd funding website and we had to actually convert the crowdfunding website to a fund in sort of the six week time frame that we came up with the idea to start investing in startups so that was first 100 days we had a program we had invested in seven companies and we ran a demo day so we ran an event where we invited all these investors one of the greatest things any startup can do if I could encourage like one thing is launch as often as you can and as fast as possible that's been incredibly valuable to boost boost launches four times a a year we have a program in demo days and we do them both twice a year and it just makes you better it makes you think how do I make this a little better how do I tweak this I don't think people press the button enough they all try to say stealth like they have some unique Insight that the world's not ready for and it's like the world's ready they just need to try it and tell you that it's sucks and you need to be okay with that dude our first iteration I big borrowed and stole 70 people to get to that event then I raised a $6 million fund that was sort of our first outside capital from like there were four people who are investor in the 500k who $6 million and that sounds like a lot but a fund that you can't really generate enough Revenue off of $6 million to pay your employees or anyone so me and my partner were very low cost I don't think I was paying myself at this time maybe small amount this last the first 3 to four years basically like was 500k investment $6 million fund and then we went out and we tried to raise a First Institutional fund and we were very fortunate we had built up a brand as we are the Bitcoin investor like we are investing in Bitcoin related startups that is what we're going to do and we were so early and no one else wanted to invest we were writing like $10,000 checks the companies were incredibly thankful and we were investing and getting a pretty sizable amount of the company and we were a th days in so that's roughly 2 and 1 half 3 years in and we probably had two markups and we'd done a 100 deals and so I'm looking at four or 5 years into boost VC and like no one has piled money into our company we were just like a weird side show that was doing Bitcoin related things and we were kind of growing in the wild over there somewhere and we just never looked like what people wanted and so we were really fortunate we were in acquired taste and we were able to attract the money to be able to raise our next fund which ended up being $38 million which was a big deal but the reason we were able to do it was institutions and individuals and family offices were curious about Bitcoin and so we had built this brand in Bitcoin and at this moment when everyone's starting to get curious about it we were there to fundraise this font and then about 8 years in 20 21 2022 comes along and Bitcoin goes Gang Busters coinbase is the darling that goes public all these things just start to hit but there was an 8-year period where basically no one fundamentally was interested in what we were doing and we just had this internal conviction that we were still investing in good people and that's why we continue to do what we do we just want to invest in great people bring them together give them a shot and see if what they can do and allow them to make great judgment going forward we're now at fund 4 and if I managed your money before 2019 I've returned you at least 2x your money so if you gave me a dollar I've at least returned $2 and in some cases in January it'll be somewhere near Four this one small thing that I saw on your website the phrase is be the Cockroach I want you to explain what do you mean when we were going through the Journey of investing in the startups and no one really investing in our startups after we had invested but we were like dedicated to this Bitcoin space the first deal we ever backed was not Bitcoin it was a on demand food delivery startup and it was called favor two Founders fantastic Zach and Ben and they almost ran out of money like seven times but they kept growing volume like they kept doing more deliveries and they kept figuring it out and I realized that this was the type of founder I wanted where it was no complaints and no matter what they were going to survive and they were never complaining that they were running out of money they just were running out of money and then we started to refer to them as cockroaches and we were just like Oh They'll be find their cockroaches and the great thing about cockroaches is very hard to kill if they are in a competitive space no one wants them in their space and they can survive for 40 minutes underwater and they're good at a collaborative problem solving and so we just realized that there was this animal that most people felt was very very gross and negative and bad that was like our wild animal that we wanted to be investing we wanted to invest in these cockroaches that become something else like they' become you know beautiful phoenixes or whatever that's such a good takeaway for me personally like it's kind of like a sub Community like I identify as a c like going to persevere whatever I do that's such a good takeaway I really like what you write and I wish more people would go follow Adam's newl Adam how can people find you feel free to email me it's Adam boost. VC that's probably one way to find me the other is follow me on Twitter that's probably the lowest friction at Adam Draper or I write a blog at things I write which we actually covered a lot of my blogs to but it was great to hang H manov thank you so much