DFJ continues global expansion(3)

Draper Fisher Jurvetson has further expanded its global affiliate network in recent weeks with the establishment of Russian and Israeli funds and affiliates.

Late last week the veteran Silicon Valley venture firm agreed to partner with 10-year

old Israeli VC firm Tamir Fishman Ventures, re-branding the Israeli firm DFJ Tamir Fishman Ventures, while two weeks prior it joined with Russian commercial banking group VTB to form a new Russian venture capital fund, DFJ-VTB Aurora. The relationships represent the latest additions to a 16-year-old global network of DFJ-branded affiliate funds, which span 30 cities and manage nearly $6 billion (€4.2 billion).

“We strongly believe that the partnership model as created by DFJ defines the next era of the venture capital industry as this market is evolving into an international business,” Eldad Tamir, managing general partner of DFJ Tamir Fishman Ventures and co-CEO of Tamir Fishman, said in a statement.

Don Wood, the DFJ managing director who oversees the affiliate network’s expansion, recently told sister publication Private Equity International that venture capital used to be a Silicon Valley phenomenon.

“People would invest as far as they could drive in an hour, and that was great during the ‘80s and even part of the ‘90s,” Wood said. “But with the internet and instantaneous communication” propelled by products and services from former DFJ-backed companies like Hotmail and Skype, he said, “people are able to communicate constantly and instantly, so business ideas are flowing all around the world”.

Firm co-founder Tim Draper’s original vision was to create a network of DFJ-branded funds that share economics, deals, information and limited partners, but are locally-based and independent. Wood described it as mesh network, in which members interact with each other, not just with DFJ in Menlo Park.

“Our whole network, the affiliate model, has to do with being close to the companies,” Wood told PEI. “But it is hard to be in Silicon Valley and invest on the East Coast, and even harder to invest in Vietnam or China or Europe or Russia.” In addition to venture capitalists providing funds to entrepreneurs, part of their job is to administer advice, which is best done locally, Wood added.

DFJ decided to expand its international network to incorporate region-specific affiliates as well as investment strategies divergent from its traditional focus on early-stage technology companies.

“We are willing to have different investment strategies that are appropriate for the [given] region,” Wood said. “We’re more open to later stage and infrastructure and lower tech, but there’s still a technology and early stage DNA in what we do and the groups we try to find.”

The firm has been stamping its brand around the world with increasing frequency of late. In August, DFJ bought a strategic stake in Esprit Capital Partners, a European venture capital firm, to create DFJ Esprit as its springboard into Europe, and in May, DFJ did the same with Brazil’s FIR Capital Partners, creating DFJ FIR Brazil.

Many of its affiliates have funds in the market. DFJ’s Dragon Fund, its Chinese affiliate, is currently raising a $125 million fund, while DFJ Esprit is raising a €200 million vehicle and DFJ FIR Brazil is raising $100 million. DFJ India is raising a $200 million fund, and DFJ Gotham, the firm’s New York-foccused affiliate, is targeting $200 million for its second fund.