That’s because 500 Startups has filed the paperwork necessary to allow for a general solicitation exemption while fundraising. In plain English that means McClure, who has never exactly been shy about what’s happening at 500, can freely discuss that new fund in public. Like, maybe, at his conference for VCs and LPs tomorrow.
Previously, firms like 500 could talk behind closed doors about their new funds, but they couldn’t publicly advertise that they were looking for investors. That changed last summer when the SEC lifted its ban on general solicitation, but certain requirements remained — in particular, if firms are going to be making public statements about their fundraising, they need to be ultra-careful that everyone who writes a check is an accredited investor.
To deal with that provision, 500 Startups is partnering with equity crowdfunding platform SeedInvest to do all the investor verification and other services. The firm will be using SeedInvest’s white-label platform to manage its fundraising activity and keep track of investors that have put money in.
That said, even though 500 Startups is partnering with an equity crowdfunding platform, it’s not exactly “crowdfunding” its $100 million fund. In a phone conversation, McClure said that filing for a general solicitation exemption was more about playing by the rules than it was about trying to crowdfund $5-$10 million checks.
“We want to make sure that we’re playing by the rules as the SEC has defined them, to make sure we are able to talk publicly about our fundraising efforts,” McClure told me.
By doing so, 500 Startups could potentially find new investors that it hadn’t previously been in touch with. Or they could find 500, through new channels like Twitter. After all, McClure has 200,000 Twitter followers he can now talk about his new fund to, and the 500 Startups Twitter account has another 200,000 followers.
Then again, if you haven’t heard of 500 Startups by now, you probably should have.
“I think it was tough in the past to approach institutional investors, since we were still pretty new and still pretty small,” McClure said. “But we’re not so new and not so small anymore.”
Indeed, 500 Startups now has more than 30 employees, including 10 who are making investments. It also has a fairly international presence, with employees in Brazil, Mexico, China, India and Malaysia, as well as San Francisco and Mountain View. And it’s running four sessions of its Accelerator program a year, graduating about 30 startups per class.
It’s looking to raise more funding based on some early success in the three years or so that it’s been writing checks. Some exits include Wildfire, Makerbot and Viki, all of which were acquired in nine-figure deals. It’s also seeing about 20 percent of the companies it made early-stage investments in raise later rounds, with companies like Twilio, CreditKarma, SendGrid, TaskRabbit, and 42 Floors taking Series B or later rounds of investment.
To keep investing at a pace of more than 200 startups per year, 500 could use that fresh $100 million. The new money could also help 500 continue to follow-on with investments in winners, which has been somewhat constrained by the size of its first two funds.
But hey, maybe being able to discuss the funding could help move the process along. McClure sure thinks so.IMAGE BY Flickr USER Jared Goralnick UNDER CC by-ND 2.0 LICENSE