Billionaire Draper Shuns China Investments Amid Capital Controls

(Bloomberg) -- Billionaire investor Tim Draper, an early backer of Baidu Inc., has stopped investing in China-based companies because getting money out of the country has become too difficult.

China restricts the amount of money that can leave its borders to limit the pressure on the yuan and recently tightened capital controls. The moves have already scuttled some takeover deals.

“I'm not investing in China. I've stopped, I've closed the door,” the managing partner of Draper Associates said in an interview in Sydney on Tuesday. “Why would I invest in a country where they don't let money leave? I'm a fiduciary, I have to take care of my investors.”

Draper gained fame for investments in startups that went on to become household names, including Tesla Inc., Hotmail and Skype. He also backed blood-testing startup Theranos Inc. and has defended founder Elizabeth Holmes even as questions have been raised about the accuracy of the company's technology.

While China may be off his agenda, Draper still has an appetite for investments in the developing world. A passionate supporter of bitcoin and the underlying blockchain technology, he expects the take-up of new digital forms of payment will be faster, in the same way that many Chinese skipped fixed telephone lines and went straight to mobile.

“I think the same thing is going to happen in place like Africa, Indonesia, South America -- they are going to just jump straight to bitcoin,'' Draper said. He recently invested in Africa's BitPesa, which aims to make doing business across the continent and different currencies easier.

He lauds the attitude to bitcoin in Japan, where the government has decided to embrace the currency and formally regulate it. Another of his recent investments is U.S based Tezos, where Draper participated in a so-called initial coin offering of digital tokens. 

“Geographic borders have fallen,” Draper said, arguing good ideas will spread regardless of where they are originated. “I am agnostic as to where the company comes from as long as it is a place I can invest in and get my money out.”

To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Reed Stevenson