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Tim Draper: Now's the 'best time' to start a business

Venture capitalist Timothy Draper says that despite the recession, now is a great time to start a new business.

Timothy Draper Josh Lowensohn/CNET

SEATTLE, Wash.-- Despite the growing list of toppling multinational corporations, Timothy Draper, the founder and a managing director of VC firm Draper Fisher Jurvetson, told an audience full of Seattle entrepreneurs and investors that right now is the "best time ever" to start a new business.

To illustrate the point, Draper pointed to over two dozen companies that were founded in recessions and depressions including giants like General Electric, Chevron, and Coca-Cola. Also included were more tech-oriented companies like Skype (of which Draper was an investor), Microsoft, Hewlett-Packard, Kodak, and Adobe Systems.

In his keynote address to attendees of WTIA's Fast Pitch Forum & Technology Showcase, Draper made the case that each of these companies had done something to drastically change the way others in that industry were doing business, or that they had created completely new and different categories that solved real-world problems.

Draper noted that existing and established companies are reeling from crunched credit and skittish consumer spending, and that newer technologies continue to make it easier to fill out components of a business that in years past required more staffing and capital. That, and it's far easier to build in these components when starting from a clean slate.

One of Draper's latest ventures, XChange, builds on this idea. It allows investors to put their cash into a venture in return for company stock that can be created and liquidated with far fewer regulations than traditional IPOs. Draper believes this will make it easier for companies to get chunks of funding through stock purchases without having to jump through the hurdles of going public--including the need to hit a certain valuation.

It's also taking an eHarmony-style approach to matching up investors with potential start-ups by taking whatever information both parties have provided about themselves and setting up the meeting. If the "date" goes well, the investing can begin.

XChange is set to open up this fall.