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Silicon Valley’s Most Active Seed Fund Visits The Garage

On March 2, The Garage at Northwestern welcomed Clayton Bryan of 500 Startups, a venture capital fund and startup accelerator based in Mountain View, Calif. Bryan spoke in front of a crowd of about 30 students and entrepreneurs, discussing the trajectory of 500 and the unique perks of applying to its university seed fund, before opening the floor to questions.

In his opening slide deck, Bryan called 500 Startups the most active seed investor in the world. As of 2017, the fund has committed $300 million in capital and has invested in more than 1,700 portfolio companies. It has opened offices across the globe since accepting the first “batch” of startups in 2011 and has helped grow companies across a wide range of industries.

In fact, it’s easier to say what 500 does not invest in than what it does. Bitcoin and clean energy, for example, tend to be two areas that it stays away from. Because it is an early-stage seed fund, 500’s goal is to find companies that will get “downstream capital investors” excited, otherwise the startups will never achieve the Series A funding they need to grow into something legitimate.

“Our investment philosophy is lots of little bets,” Bryan said. “We believe a large, diversified portfolio of seed-stage and early-stage investments reduces risk and maximizes potential return relative to ‘traditional’ funds.”

500 Startups currently has investments in three “unicorns,”—private companies valued at $1 billion or more. Karma, Twilio and Grab have been 500’s most successful ventures, with the rest of their portfolio composed of companies at all different stages of the startup cycle.

The fund is currently recruiting for “Batch 21,” the next group of companies that will enter a four month incubation program in Silicon Valley beginning April 22. The deadline to apply is March 31. A typical batch receives about 2,200 applications, out of which 400 companies receive live interviews and 40 are accepted. For the 2 percent of applicants who are accepted, 500 Startups offers an initial investment of $150,000 in exchange for a 6 percent equity stake.

The reason 500 Startups is so competitive is because it offers all the resources and support an early-stage company could possibly need, Bryan said. With an incredibly strong network of founders, partners, and alumni, the fund employs people who are well-versed in all kinds of markets, both domestically and abroad. It also offers pro bono legal services and hands-on mentors whose core competencies lay in growth marketing.

“We are the rocket fuel that helps you get to the next level,” Bryan said. “What is the one metric that matters for your business that will help you kick butt for four months? That’s the question we help answer and that’s the reason companies choose 500.”