The 500 Startups Index – 369 Companies and Counting

http://www.daniellemorrill.com/2013/03/the-500-startups-index/

by dmor • 13 years ago

36 25 13 years ago

daniellemorrill.com

hayksaakian• 13 years ago

I didn't realize 9gag was in YC and 500

sachitgupta• 13 years ago

There are many others: Rapportive, 9GAG, Daily Muse, MixRank, Referly, etc.

davemc500hats7• 13 years ago

as noted above, 500 has invested in ~50 YC companies over the past 3 years. we are likely the 2nd-most active investor in YC after the Start Fund / SV Angel / A16Z / NEA group... however, we pick selectively rather than indexing (altho indexing YC is likely a pretty solid strategy too).

500 is also an active investor in companies that graduate from TechStars, AngelPad, SeedCamp, Startmate, and several other programs globally.

rdl2• 13 years ago

I'm constantly amazed at how 500 Startups came out of nowhere to become #2.

byoogle2• 13 years ago

#2 at what? (Or did you mean: http://www.urbandictionary.com/define.php?term=%232)

rdl2• 13 years ago

I mean, after YC, the second best startup accelerator, by the "if I didn't get into YC, which accelerator would I consider" metric. (SendGrid still tips the scales for historical performance in favor of TechStars, I guess)

davemc500hats7• 13 years ago

quotable: "We try harder!" - Avis (and, 500 ;)

argonaut2• 13 years ago

It is important to understand that 500 Startups consists of two separate entities/programs: an accelerator and a seed fund. It is very common for 500 Startups (the seed fund) to invest in YC startups.

To look at the flip side, it is rare for YC to invest in companies that did not actually go through YC (it has happened before, however).

davemc500hats7• 13 years ago

500 has invested in ~50 YC companies to date. I believe there are about 30 or so in our first fund.

YC has invested in 2 companies that went thru 500 accelerator first (9GAG and Vayable), and also a few others where we invested at around the same time as YC (Scoutzie, Virool, Microryza, Referly).

also, we are investors in ~20 TechStars companies (including Sendgrid), and also ~10 companies each from AngelPad in SF, and SeedCamp in Europe, and StartMate in Australia.

altho we run our own accelerator program at 500, we are frequent investors in other accelerator programs, including several around the world in East Asia, South Asia, Latin America, Western & Eastern Europe, and the Middle East.

pcl• 13 years ago

FTR, that should be Versly / versly.com down there towards the bottom.

dmor• 13 years ago

Fixed, thank you

anonfunction2• 13 years ago

Cool! I always loved iconfinder, now I know who made it possible.

davemc500hats7• 13 years ago

actually, the founders of IconFinder made it possible... we were quite fortunate to be investors rather recently.

anonfunction2• 13 years ago

I thought about how poorly that sounded after I wrote it, I've been using IconFinder for years and am thankful and happy for the founders.

mikeknoop• 13 years ago

Anyone know the story about ChirpMe? The Alexa rank seems really high (~3400) for a "beta" product:

http://i.imgur.com/2rAlmVX.png http://i.imgur.com/OcTNU5s.png

TomGullen• 13 years ago

Alexa rank can be a very poor gauge of real world traffic especially with low sample sizes

mattbarrie3• 13 years ago

Are any of these making any money? Ron Conway's second angel fund had Google in it and it only returned 1.5x because 80% went bust.

A rough calc of what it would take for one runaway success to payback the total funds invested;

Assuming $20k per deal, $7.4m invested.

Assuming 7% equity per deal, that would need one success to sell for $100m and have no follow on dilution or liquidation preference stacked on top. Given this is seed, assuming 50% dilution that's $200m+ just to return the money back to shareholders. For a big success of 5-10x on the fund, one of these has to hit $1-2 billion. I'm still ignoring liq pref which could be a killer.

A couple of these numbers might be off a bit, but I'm a bit sketchy on the spray and pray of a 369 (or 500) company portfolio unless you are really #1 (YC) and can effectively synthesize "the index".. and then you will only generate beta ("market") returns.

davemc500hats7• 13 years ago

actually yes, many of our companies generate revenue, and a good number are profitable. in fact we probably have a slight bias for revenue over growth.

btw, our initial investment at accelerator or seed is more like $50-100k, and follow-on investments at Series A/B are between $100-500k. in about 10 companies we hold aggregate basis positions of between $500K-$1.5M.

500 Startups Fund I has ~256 companies, and currently Fund II has ~220 companies (and will likely be around 275 total). out of each of these funds, we aim for perhaps 50+ companies to get to Series A/B rounds led by institutional investors (in which we will also continue investing as well), and from these perhaps 10-20 may achieve larger exits of $100M or more.

as to performance & exit model expectations, our rough model expects that 5-10% of portfolio (~10-25 companies) will do 20x or better, and perhaps 10-25% (25-60 companies) do 3-5X. at a median initial entry valuation of ~$4M, 20x would be an exit of $80M, and 3-5x would be an exit of $12-20M.

so far, 500 Startups Fund I has had about 10 exits in the $5-30M range, and 1 exit at $350M (Wildfire). still private and growing are 5-6 companies that are valued around or above $100M (Twilio, Sendgrid, Taskrabbit, Makerbot, Viki, Smule). we also have about 25-30 companies valued at between $25-$75M that look promising. with luck, hopefully some of these companies will find exits at or above current valuations (tho likely not all of them).

also different from the earlier SV Angel portfolios, 500 Startups doubles down (& triples down) selectively on our top 20-30% of portfolio companies in later rounds. we believe this enables us to weight our portfolio more towards winners, rather than a pure scattershot index strategy.

in any case, it will take a few more years to see if our strategy works, but so far it looks like it's not completely irrational.

(ps - altho they are usually higher valuation, about 10% of our portfolio is YC companies. since median valuation at YC demo day is more like $7-8M, you might have to double the target exits noted above... however we also have many of our own accelerator companies where our entry valuation is more like $1-2M to offset)

mattbarrie3• 13 years ago

Thanks for the clarification on the numbers, I guess only time will tell on the distribution of exits and what the actual returns back to you would be on them look like (20x @ $80m ignores liq pref and dilution). How many are in your team now looking after all the portfolio companies?

gregcohn• 13 years ago

noting that this has almost no correlation whatsoever to the OP's list....

The 500 Startups Index – 369 Companies and Counting

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