Venture Capital Legend Tim Draper Looks to Franchise Hostels
Skift Take
Startup Draper House, which is part of the billionaire investor's funding network, is the perfect embodiment of entrepreneurial tourism, a fast-growing sub sector that blends startup culture and venture capital with hospitality. Co-branding opportunities could help it expand rapidly.
Tim Draper, the venture capitalist who made his fortune through investments in early internet hits like Hotmail in the 1990s, is backing a new accommodation startup that has big ambitions.
Draper Startup House, the eponymous chain of 30 hostels across 25 countries that caters to both entrepreneurs and investors, offering them workshops, a digital community and funding opportunities, was founded in 2018 but took on the veteran investor’s name in late 2019 after the 64-year old billionaire reached out to founder Vikram Bharati.
Bharati, a former banker, originally called his business Tribe Theory, and now plans to scale the hostel network by using a franchise model. It's so far helped 35,000 companies around the world through its network, but he wants to ramp that up to a million by the end of the decade.
The Rise of Entrepreneurial TourismBharati said he developed the idea for Tribe Theory after traveling and spending time in hostels after leaving his job at JP Morgan in 2014. As an older backpacker he said he saw things differently.
“I realized I loved the culture, but the only thing missing for me was the business angle,” he said. “The hostels all offered the same things: the tour guide, the pub crawl, the parties. That’s fantastic, but I felt these spaces could do more.”
Eventually landing in Singapore in 2016, he later bought a struggling hostel in 2018, with the backing of the Japanese investment firm he worked for, realizing it was a hub for investors who came through its doors to meet local startups. Despite the pandemic the business expanded, although five locations — including one in remote work-friendly hotspot Lisbon, in Portugal — were forced to close.
With its deep pockets, Startup Draper House has directly funded 20 companies so far, and helped 40 others through its partner funds. Companies joining the program gain access to the 23 global venture capital funds in the Draper Venture Network.
“We want to build a million businesses, and be in 100 countries. We’re calling it 'entrepreneurial tourism' and want the spaces to be business embassies ... a new chamber of commerce where a lot of business activity h
