After 500 Startups Demo Day on Thursday, I sat down to talk to investor Dave McClure about the strategy and vision behind the early stage seed fund and accelerator program, which he hopes will eventually encompass 500 actual startups (currently the portfolio is at around 110).
In the interview McClure talks about the perfect formula for a startup (hacker + hustler + designer) and why the three Ds — Design, Data and Distribution — are important for young companies. He says that the fund basically makes its $25K to $250K bets on companies with simple revenue models, “Things that are easily understood and make money.”
He compares the 500 Startups to Ichiro, a smaller Japanese baseball player who has built a career around smaller hits. He then extends the baseball metaphor further, “If Sequoia’s the Yankees, we’re the Oakland A’s,” referring to Michael Lewis’ Moneyball, a book that chronicles the unexpected success of underdog Oakland A’s because of their strategic building of a winning team.
While 500 Startups may not have the pedigree of venture capital biggies like Sequoia or Kleiner Perkins, it can still eek out some wins simply by being scrappier and more unconventional.“We say we like to hit singles and doubles, occasionally we’ll hit a home run,” McClure said, driving the point home.
Dave McClure is a venture capitalist & the founding general partner at 500 Startups, an internet seed fund and startup accelerator program in Mountain View, CA. Dave has been geeking out in Silicon Valley for over twenty years, and has worked with companies such as PayPal, Mint, Founders Fund, Facebook, LinkedIn, SlideShare, Twilio, Simply Hired, O’Reilly Media, Intel, & Microsoft. He also likes to play ultimate frisbee when his knees don’t hurt. Dave has been an investor in over 100...
500 Startups is an early-stage seed fund and incubator program located in Mountain View, CA. They invest primarily in consumer & SMB internet startups, and related web infrastructure services. Their initial investment size is typically $25K-$250K. Selected areas of interest include financial services & e-commerce, search/social/mobile platforms, personal & business productivity, education & language, family & healthcare and web infrastructure.