The Ledger
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Venture math should focus on probability distributions, not ownership percentages
“But the point that I was making with Michael is that ownership really isn't the math that we use to kind of think about how we invest. We really think more in terms of number of investments and the likely probability distribution of finding large outcomes. And…”
Calacanis: 500 Startups would be twice as successful doing half as many deals
“I think if they can maybe, I think they would be twice as successful if they did half as much. That would be my, that is my advice to Dave. Do half as many deals, but do them twice as well”
Predictably hitting unicorns requires investing in 200 to 500 startups
“If we find, you know, unicorn only two percent of the time, or heaven forbid, one percent of the time, our portfolio size needs to be a minimum of 50 to a hundred to really have a shot at that, and I would argue, actually, we are aiming for more than one unico…”
Mohnot Faked Having a Fund by Investing Personal Capital for 18 Months
“For the first 18 months, I was basically funding it out of my own pocket, pretending like I had a fund. And it was most of the money I had at the time. Like I was selling stock to invest in startups to pretend like I had a fund.”
Overemphasis on venture signaling indicates underlying company performance issues
“My perspective on this is typically that if the founder or other investors are more worried about my investment decision than the baseline performance of the company, there's already likely some kind of problem there.”
500 Startups has invested in over 100 Y Combinator companies
“We've been investors through our seed investment program in a bunch of YC companies, over a hundred. I think we're actually one of the top three or four investors in YC companies over the years.”
Emerging startup markets lack investor sophistication, not entrepreneurial talent
“I think the big, sort of, gap in many, many markets now is really on the investor side, like, investor education and sophistication,”
The best startups execute rapidly on their single core metric
“This is something that we noticed, Eric, my business partner, and I noticed in many of the portfolio companies we worked with at 500 startups and in our own angel portfolios, the best ones are the ones that execute on that one metric that matters very fast.”
Strong executing teams at 500 Startups were often weak pitchers
“At least at 500 startups, I've seen so many teams execute while they were in the accelerator program, and very often they were not necessarily the best at pitching.”
500 Startups shifted toward investing in higher-traction companies
“And that was actually an unusual bet for 500 startups because 500 startups has been investing in companies with more and more traction.”
500 Startups targets 1% to 5% ownership in seed rounds
“The typical ownership that we hold in most of our seed round investments is probably between one to five percent. Maybe a little bit higher in some of the international geographies where valuations are lower. For Accelerator, it might start at around five to s…”
Y Combinator seeks product engineers while 500 Startups prefers community hustlers
“I think it seems like YC tends to have more product focused engineers, you know, that they're looking for, and 500, you know, there's an interesting thing that I'd love for you to link up to, is there's a core question where Dave McClure really writes about th…”
Only two of 150 incoming 500 Startups companies properly tracked metrics
“Across the entire team at 500, we can maybe think of two companies who came in and they had the right metrics and they were tracking them properly.”
Brad Feld and Fred Wilson are investors in 500 Startups
“Brad Feld and Fred Wilson have been sort of mentors and, you know, are small investors in our fund”
500 Startups accelerator terms include a $500K follow-on option
“With our accelerator companies, we have a kind of fixed structure that we invest into and we ask for a 500 K option to invest in the follow on round where we don't exceed 20% of the round.”
500 Startups selection hinges on early validation and network recommendations
“So I would really say for anyone that wants to get in I, you know, focus on, Just getting some early validation and show that there is some opportunity with your business, and then also try to just get connected with people within the network because if they v…”
500 Startups has invested in over 1,200 companies across its funds
“1200, I think to be exact, the accelerator and the, and our sort of main fund and some of the micro funds. Yes, probably about 1200. I think it's a little bit over 1200 now.”
500 Startups employs 80-90 staff, including 14 growth and distribution experts
“We have almost close to, like, 80, 90 staff, and, you know, we have a team of almost 14 distribution, sort of, like, distribution in our terminologies, like, sort of, online marketing sales experts who help our companies and accelerator and, sort of, in the po…”
500 Startups takes board observer rights rather than formal board seats
“No, we have board observer rights, but we don't take board seats.”
500 Startups evaluated 1,100 applicants to select 36 for Batch 14
“We looked at over close to 1100 companies to get down to 36 companies.”
500 Startups increased its average initial check size to $75K–$100K
“It ranges between 50,000 to about a 100,000 dollars, so it, there's a range. But I would say, right now, you know, before, probably about two years ago, it was probably average of a fifty-k check. We're probably doing about 75 to about a hundred-k check sizes …”
500 Startups prefers hiring operators over finance and venture backgrounds
“At 500 startups, we tend to hire people who've got operating backgrounds rather than out of finance or venture.”
Elizabeth Yin reviewed over 20,000 startup decks at 500 Startups
“Prior to Hustle Fund, Elizabeth was a partner at 500 Startups, where she ran the 500 Startup Seed program in Mountain View, and where her and her partner saw over 20,000 startup decks.”