5 years rise, stick to the investment strategy behind the 500 startups

today, let’s talk with one of the founders of 500 startups Dave McClure rise of the company for five years. They have invested more than 1000 companies, therefore, may say “500” Startups has far more than they “500” target.

TechCrunch through data describes the 500 startups company over the past five years of history. So far, they have to come from more than 50 countries thousands of enterprises has injected $100 million. 500 startups already has three main foundation, there are six tiny funds, assets under management have reached a $170 million, and the plan before the end of the year will be his team grown from 50 to 70 people.

with top investment sequoia capital and Y Combinator (a famous American business incubator), compared to 500 starups although is newly rich investment community, but Dave McClure not satisfied, he plans to make 500 startups to become the world’s largest venture capital firms.

in a question and answer, McClure counted 500 startups investment success of the company. Among them, there are only 2-3 “unicorn” (scale billion per dollar), but poor 30 “centaur” ($one hundred million), and a little pony (scale for tens of millions of dollars). Why the different sizes of companies using animals as generation refers to the size of the term? McClure says, this is because he wants to highlight that although valuations are not yet billions of dollars but it is very promising startups.

“people are always interested in 1 billion the size of the company door, however, our focus is not just them. For us, the investment company size is also very happy, we can also get considerable returns.”

McClure told e27, “” unicorn” this company is rare, and unpredictable. ‘centaur’ frequency will be higher, and predictability will be better. If the “pony”, this company is a lot. But we can profit from these three companies. Let people only pay attention to the “unicorn” is wrong, to guide the public to pay attention to more small companies is the way.”

startup of the investment: the early admission, at any time to follow up

“in addition to successfully invested in a number of the startups, when we produce the first” unicorn “, we have 6 ‘centaur’ and more than 30 “pony”. Normally, our investment 15% 30% will be rewarded, 5% 10% can produce generous returns. We are convinced that at least 100 of 1000 investment companies can succeed, and from a number of companies have been able to return.”

for investment strategy, McClure they approach is the earlier approach, and then stay for a few rounds. Generally speaking, the income of these companies will be gradually from $5 k – 1 k a month up to 50 k to 100 k per month. “Up to 100 k is not accidental, do single such result is some of the strategies in the escort. If the company income continues to grow, and there are new investors to enter, then we will consider lowering the seed round and A round of investment, and continue to follow up in B round of investment. But, this is also the variable, we have to consider our holdings of shares and its valuation. If the development momentum is good, then we will follow up in B wheel, investment will range from $500000 to $1 million.”

company how many transactions worth the investment?

“the company’s turnover is of great importance for the investor. The startup should highlight the aspects to be lucky in 500 startups to see? McClure said, compared with some of the hundreds of thousands of small business customers, B2B startups may only 5 to 10 customers, but the income is far more important than the customer number.”

“for B2C company is no longer the same. We hope that the enterprise has hundreds of thousands of active users, even not to make money, also have to ensure that users. Traffic is very empty, we prefer to use flow, even flow to evaluate enterprise.”

what challenges we face in southeast Asia?

McClure says 500 startups investment company, now has a 120-140 in Asia. As Asia’s economic rise, the company will increase the number of Asian companies. Southeast Asia is very has the investment potential, we have confidence in southeast Asia. Especially in recent two or three years, the investment environment has improved. McClure think, Japan, China, South Korea, southeast Asia and the United States company investment are geopolitical factors to consider. But for him, he prefers low liquidity and corporate mergers and acquisitions are not active area of investment.

and, McClure and team research thinks, Thailand and Indonesia to investment destination. “Investment in Malaysia, Singapore and other places are torn. Although these local economic development is good, but the market is too small. We are looking at in Indonesia, Thailand, the Philippines and Vietnam. The choice is, of course, Indonesia and Thailand, followed by the Philippines and Vietnam. The conclusion mainly from population and market penetrating consideration.”

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