500 startups application
In 2015, 500 Startups generated ~$14M in sales from several sources including control fees, accelerator event tuition, events & conferences, partnerships & sponsorship’s, & education. In the future, they may also make money based on carrying (aka income) from their investments. In 2016 they estimated total finances will grow to $20-25M+ from increases in workforce, budget under management, and different programs & services.
Historically, most of their price range has come from 3 number one sources: mgmt charges from their funding finances, tuition fees that cover their accelerator programs, and attendance revenue & sponsorships from their occasions & conferences. Last year they additionally commenced getting cash from customer acquisition/boom advertising and marketing consulting & investor education.
Their resources of sales in 2015 are designated below:
1) ~$6M came from control charges from their finances, which totaled ~$200M in 2015. (their price structure averages ~2%/12 months, altho it starts off evolved at 3%/12 months after which decreases over time). As the quantity of capital below control grows, their sales on this vicinity will also grow (altho word that their primary purpose is to make cash on earnings from their investments, aka “convey”, see below)
2) ~$4M came from accelerator application tuition, at a price of ~$25k per team (notice: as of July 2015, we invest $125K much less tuition cost of $25K for a net $100K, usually for 5% equity). $125K is going to the agency as an investment, of which $25K is going to their incubator LLC to cowl workplace space, staff support, distro crew, alongside different amenities & costs. they presently run 4 batches in keeping with 12 months out of their Mountain View & San Francisco offices (~40 co’s x 4 batches/yr = ~a hundred and sixty co’s * $25K) = ~$4M/12 months. Note that their fees for jogging the accelerator application are around $5M/year, so we are possibly still strolling at a moderate loss in this vicinity.
3) ~$3M came from their occasions, which includes their PreMoney conferences, their growth advertising, and marketing or “DISTRO” events, their GeeksOnaPlane trips, and different in-character events & conferences. maximum events run destroy-even or make modest earnings, altho generally, they optimize for audience reach over earnings (in particular where the target market is founders, geeks, or designers who don’t have much money yet). Sponsorships come from companies like Amazon, Rackspace, Mailchimp & others (thanks!), and additionally from some of their investors.
4) ~$1M got here from client acquisition/growth advertising consulting sales generated via their “DISTRO” group, which matches with their portfolio corporations to increase clients and revenue. In 2016 they count on sales in this region to develop substantially because of increases in their team size.
In 2015 their group of ~100 people operated on overall finance of ~$17M, approximately 2/3 of which went to human beings & salaries, and 1/3 to workplace area and different non-humans stuff. As a result of spending $17M and bring in $14M, they operated at a loss of ~$3M in 2015, which they financed through debt. they expected that they might also retain to perform at a moderate loss in 2016, altho they also count on revenue to develop to $20-25M. they will probably add at least another 30-50 human beings to the crew as well, possibly more.
Note in the future, they are hoping to generate revenue on income (aka “bring”) from investment returns, altho that is possibly still a few years away for the reason that their 1st fund is only ~6 years old and their 2d fund is ~4 years antique. If they are lucky in returning >1x their fund capital, they make ~20-30% of any income they generated from funds lower back on funding, after protecting their fund expenses. typically most funds don’t see any bring until 7-8 years into operation (& indeed a few price range never get to bring, ever).
(ex: for a 10-yr fund of size $50M, if we go back $100M, earnings would be ~$50M, and convey might be 20% of that or ~$10M. Amortized over the 10-yr lifestyles of the fund we’d make ~$1M/12 months, or perhaps slightly extra if they go back capital to their investors earlier than 10 years. If they are not worthwhile on fund investments, then they get not anything from bring — zip, zilch, nada, bupkus).
What is the reputation of 500 Startups?
Let’s restate the query for clarity’s sake, and so that we do not make this thread a love-fest for 500: What is the popularity of 500 Startups?
If they’re sincere here, the reputation of 500 Startups is mixed, however, it doesn’t want to be – it is simply mismanaged at the moment. A few small tweaks would permit the program and community to shine. I am writing this because I individually see the fee of the five hundred crew, the individual crew members, the mentors, and the agencies, of course, however, the fact is that for most of 500’s “customers,” that is investors, potential recruits, and M&A departments, 500 has the raw materials to make something terrific but, today is a long way too disorganized for someone without proper context to digest properly.
I don’t see this as a long-term or problem that can’t be corrected. Therefore, I’ll without a doubt offer three (3) friendly hints that I suppose might make a metric ton of difference and help every person involved:
500 needs to rent a pro COO and supply this individual a healthy quantity of operational and procedure control, in addition to an assistant to deal with scheduling, messaging, e-mail, and all different coordination-based tasks.
500 desires to reorganize and remodel its internet site and email communications, mainly invitations for demo days, activities, and the like. This will make sure that proper humans are invited and attend events.
Founders who input the 500 applications have to be fully aware of the signaling advantages and signaling dangers that are associated with being on this incubator. This is a complex topic. On the one hand, that is a selective incubator; on the alternative hand, newshounds, investors, and potential employees without proper context are confused about 500’s lifestyle and pace. This isn’t always a bad factor but can lead to misconceptions and capacity misalignment when there may be a fit and a job it is offered. The pleasant element of a founder in the 500 application can do is to track out 99% of the noise, different agencies, mentors, Twitter, activities, etc. in order to create and add value for their markets.