Billionaire fund manager reveals two major red flags to avoid 90% of bad investments originally appeared on TheStreet.
Billionaire fund manager Tim Draper has just shared his ultimate mantra to dodge bad investments.
Well-known for his VC investments in Tesla, SpaceX, and Twitter, the Draper Associates founder recently warned against two red flags that he said discerning investors should avoid to save themselves from 90% of bad investments.
The first red flag that Draper shared was a company following an easily imitable strategy. If one can Google more than 100 companies doing something similar, then it’s a race to the bottom because someone will ultimately do it cheaper.
The second red flag Draper revealed was regulation. He said he had seen the Securities and Exchange Commission (SEC) “kill” startups because they “might someday look like an exchange.”
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Notably, the SEC really went after crypto trading platforms for alleged securities violations over the last few years.
Prominent crypto exchanges such as Coinbase (Nasdaq: COIN), Kraken, Ripple, and Binance were not spared from the wrath of the federal securities regulator, which alleged that these platforms were offering unregistered crypto securities.
These bitterly fought legal battles in the U.S. put a question mark on the status of leading crypto assets such as XRP, ETH, etc., as to whether they are securities or commodities.
Since becoming the president in January 2025, Donald Trump has vowed to turn the U.S. into the “crypto capital of the world.” Taking their cue, the new SEC administration is retreating from an aggressive campaign waged by former Chair Gary Gensler.
Both the administration and the industry seem to be working toward the shared goal of achieving increased regulatory clarity around crypto assets.
Notably, the week of July 14th is “Crypto Week” as the Congress considers the CLARITY Act, the Anti-CBDC Surveillance State Act, and the GENIUS Act. How these bills progress will be decisive in the future of crypto assets not only in the U.S. but in the world.