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Sorry but how does 500Startups really differ from all the other VC funds out there? Real question.

peloton 12y ago
From the LP pov, it boils down to capital concentration. Most LPs I've spoken with are not that different from Michael Kim (LP from the article) in that they are for capital concentration. It is the most controversial part of the offering. Reference: http://25iq.com/2013/01/16/charlie-munger-on-investment-concentration-versus-diversification/ http://25iq.com/2013/01/16/charlie-munger-on-investment-conc... http://robgo.org/2013/10/21/decision-making-speed-of-big-funds-vs-seed-funds/ http://robgo.org/2013/10/21/decision-making-speed-of-big-fun... https://twitter.com/trengriffin/status/264789822982471680 https://twitter.com/trengriffin/status/264789822982471680 https://twitter.com/sama/status/458094667972624384 https://twitter.com/sama/status/458094667972624384 That said, in the end, real performance trumps everything.
k-mcgrady 12y ago
He's funding a lot more startups, spreading risk, and supposedly therefore increasing his chance of funding a very successful startup.
austenallred 12y ago
They do a ton of small investments (hence the name) all over the world, via both an accelerator and a seed fund. Differences: * Their site says they've funded over 800 companies, which is absolutely absurd in the few short years they've been around. A lot of venture funds won't do that many deals in their entire lifetime, let alone in a few years. * They do a lot of International deals (in 40+ countries). Most other VC funds are skeptical of (and often avoid) investments outside of Silicon Valley, let alone outside the United States. * My own interpretation is that 500 Startups also focuses on things that generate revenue quickly, and not so much trying to find the next Facebook. * And then there's Dave McClure. If you know who he is, this bullet point needs no explanation.
- crdb 12y ago
  Don't forget: they're "almost always" not the lead investor. They specifically will only look at companies with an existing investor. When I asked, Khailee Ng told me they used that as a filter (presumably instead of "only warm intros" and/or associates binning thousands of cold pitches). I thought it was a neat idea, especially since the industry does this unofficially anyway (http://paulgraham.com/fr.html http://paulgraham.com/fr.html - "Avoid investors who don't lead" - obviously 500 Startups is an exception thanks to their brand and network).

From the LP pov, it boils down to capital concentration. Most LPs I've spoken with are not that different from Michael Kim (LP from the article) in that they are for capital concentration. It is the most controversial part of the offering. Reference: http://25iq.com/2013/01/16/charlie-munger-on-investment-concentration-versus-diversification/ http://25iq.com/2013/01/16/charlie-munger-on-investment-conc... http://robgo.org/2013/10/21/decision-making-speed-of-big-funds-vs-seed-funds/ http://robgo.org/2013/10/21/decision-making-speed-of-big-fun... https://twitter.com/trengriffin/status/264789822982471680 https://twitter.com/trengriffin/status/264789822982471680 https://twitter.com/sama/status/458094667972624384 https://twitter.com/sama/status/458094667972624384 That said, in the end, real performance trumps everything.

k-mcgrady 12y ago

He's funding a lot more startups, spreading risk, and supposedly therefore increasing his chance of funding a very successful startup.

austenallred 12y ago

They do a ton of small investments (hence the name) all over the world, via both an accelerator and a seed fund. Differences: * Their site says they've funded over 800 companies, which is absolutely absurd in the few short years they've been around. A lot of venture funds won't do that many deals in their entire lifetime, let alone in a few years. * They do a lot of International deals (in 40+ countries). Most other VC funds are skeptical of (and often avoid) investments outside of Silicon Valley, let alone outside the United States. * My own interpretation is that 500 Startups also focuses on things that generate revenue quickly, and not so much trying to find the next Facebook. * And then there's Dave McClure. If you know who he is, this bullet point needs no explanation.

crdb 12y ago
Don't forget: they're "almost always" not the lead investor. They specifically will only look at companies with an existing investor. When I asked, Khailee Ng told me they used that as a filter (presumably instead of "only warm intros" and/or associates binning thousands of cold pitches). I thought it was a neat idea, especially since the industry does this unofficially anyway (http://paulgraham.com/fr.html http://paulgraham.com/fr.html - "Avoid investors who don't lead" - obviously 500 Startups is an exception thanks to their brand and network).