Sunday, October 2, 2022

How Difficult Is It to Get Selected in 500 Startups?

How Difficult Is It to Get Selected in 500 Startups

A global venture capital firm, famous in both the financial and technology scene, 500 startups back a wide range of companies and has managed, thus far, to maintain its exponential presence in the global market. Providing the needed financial support to rising tech startups, 500 Startups fixates on high-level criteria when looking for rising startups to invest in, making it one the most challenging venture capital firms to get selected by. So, how difficult is it to get selected in 500 Startups?

What Is 500 Startups

One of the most inquired about matters when talking about 500 Startups, is how does it evaluate a potential startup investment? But first, to understand this process, one must understand the nature of this venture capital first that is so renowned in the financial scene.

As a venture capital firm, 500 Startups has more than $2.8 billion in assets to be invested in emerging founders seeking to mark their presence in the ever-growing technology scene. The company focuses on one thing, technology markets. A factor that seems relatively valid as the world dives deeper and deeper into digital transformation and the heavy acceleration and adoption of diversified innovations on all fronts. The direction of 500 Startups is driven towards technology, innovation, and capital investments with the potential to unleash long-term value and play its role in accelerating economic growth.

Based in San Francisco and Silicon Valley, 500 Startups was founded in 2020 and has invested in more than 1,400 firms from all over the globe. Currently, it has an estimate of $200 million in assets under management, with a vast mentor network that encompasses some of the biggest names in the tech industry. Some of these names are PayPal, Yahoo, Big Tech giants Google, Twitter, Facebook, and Apple, YouTube, and Microsoft’s LinkedIn. This renowned venture capital firm’s latest endeavor is to branch out to reach new heights, with the last one being Financial Technology companies.

What Does 500 Startups Invest In?

Before diving into how difficult is it to get selected in 500 Startups, let us first elaborate on the type of company this funding firm focuses on. Chiefly, 500 Startups invests in customer and SMS internet startups and anything related to web infrastructure services. The most promising areas this venture capital fixates its attention on are financial services, eCommerce, any search, social media or mobile platforms, business and personal productivity, education and language, family and healthcare, and finally web infrastructure startups.

Primarily, 500 Startups investment size ranges from $25K to $250K. Its investment structure focuses on two elements, priced rounds and convertible securities – also known as convertible notes. Be it as it may, in both cases, the fund firm always asks for information rights, as well as pro-rata rights.

Pro-rata rights are a right provided to an investor, enabling them to sustain their primal ownership percentage for future financing rounds. It defines the right investors have to guarantee and maintain their initial ownership level throughout any subsequent financing round.

How Much Money Does 500 Startups Invest In?

Getting accepted is quite hard. Let’s just start there. 

With an extensive network of startup programs, the Silicon Valley Venture Capital has $350 million in committed capital spread over four chief fUnds and another 13 micro funds. Its list of investments covers ideas, products or prototypes, and companies ready to release their product to the market.

Its investment range starts at $150K, which in exchange, it will get 6 percent and charge a $37.5K fee for any startup participating in its 500 Seed Program, structured as convertible security. Another investment is the $100-250K investment on market terms. It charges between $25K TO $50K fee, which mainly depends on the startup’s geography for participation in the firm’s 500 Series A Program.

To apply, interested startups or their leaders can apply for funding and participation in any of the 500 Startups programs on their official website, where they can submit a brief description of the company. Another step would be including a link that would direct to the startup’s most recent investor presentation. 

How Difficult Is It to Get Selected in 500 Startups?

As one of the most acclaimed venture capital funds for startups, naturally, the 500 Startups entry difficulty is quite high.

The acceptance rate for any 500 Startups batch does not reach 2 percent. Meaning, it is harder than some of the world’s elite establishments, such as Ivy League universities Harvard, Stanford, Princeton, and Yale.

An estimate of 64 percent of the startups that get accepted by the established funding firm has usually submitted their applications twice or more. This is mainly due to the fact that 500 Startups programs focus on growth tactics. Most startups that submit their application for funding generally have not reached a certain maturity level to handle that much capacity in their first initial submissions.

An approximation of almost 71 percent of startups that do actually get accepted into 500 Startups programs applied within the first 45 days after the applications’ window is open. Rising companies that submit an early application often get called out for an interview where they will receive feedback from a venture partner to inform them their startups have not been accepted for a particular batch.


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