Dave McClure’s 500 Startups is looking for participants to join its next incubator program, which will run from October through January. And for the first time ever, it’s going to open the process up to allow anyone to apply. To help it get through the process, 500 Startups Accelerator will be using AngelList, making it the first incubator to leverage the platform for applications.
McClure told me that historically, the program has avoided having an open application process and instead has taken on Accelerator startups only through referrals. So far, that has worked out just fine for 500 Startups: It’s had four successful incubator programs, usually with 20 to 35 startups participating.
As a result, McClure & Co. have been able to avoid the frustrating, time-consuming process of reviewing applications. That said, McClure told me that, while referrals have helped it to find a ton of interesting startups — and avoid sorting through a lot of crap — he also recognized that he’s probably missed a few that might not have been part of his network.
That’s where AngelList comes in. The professional network for startups and investors will help 500 Startups vet applicants through a mix of algorithmic ranking and curation from mentors and others. The AngelList platform will help speed up the process by weeding out unqualified applicants. It will also allow 500 Startups to scale up the application process without having to manually review all the applications by hand.
Not everyone in the next class will come from AngelList — 500 Startups expects to choose between five and 10 startups through this process. It’s already picked a few to participate and is reviewing several others. But McClure said that it was important to open up the applications process in a way that would allow it to review companies that it might not have seen. That’s especially important because so much of 500 Startups’ focus is on startups that are somewhat non-typical, for instance those that are in international markets.
In addition to opening up the application process, 500 Startups is changing the terms of its investment for companies that have already raised some funding. Typically, it provides $50,000 for 5 percent of equity, with an option for up to $200,000 in later rounds. But companies that have raised at least $250,000 will be able to join the program for only 3 to 4 percent of equity.
The fifth 500 Startups Accelerator will begin in October, with Demo Days in late January or early February. Companies interested in applying can do so on AngelList at angel.co/500startups.