When 500 Startups launched more than a decade ago, we were anything but conventional. This was not a traditional Sand Hill road venture capital firm, which tended to be tight-knit and exclusive. Instead, we sought to be inclusive. We flexed our operator backgrounds and diverse mentor network, but what stood out the most was our investment thesis and conviction in unobvious founders and geographies beyond Silicon Valley.
From the very beginning, our investment strategy revolved around two contrarian theses:
1. Diversified portfolio. We believed that making multiple seed investments across sectors, including those that were underserved or overlooked by traditional venture capital, and building an expansive portfolio was key to de-risking early stage venture investing. Hence our original “500 Startups” name.
Industry players generally dismissed that approach as “spray and pray.” But the breadth and depth of our portfolio has served us well. Over the course of the past decade, we have invested on average in 275 companies per year. Today, our portfolio consists of more than 2,500 companies, spanning multiple sectors, stages, and geographies. This has allowed us to catch a glimpse of emerging trends, which led us to spot opportunities early on.
As an example, we have generally backed SaaS companies at a rate well above the venture capital industry. It was a good move. SaaS has contributed to our first fund’s top decile TVPI performance. Some of our earlier investments include Twilio (2010), Talkdesk (2011) and Canva (2012).
To date, our diversified portfolio boasts 33 companies valued at over $1B and 120 companies valued at over $100M — from fintech and productivity tools, to edtech and e-commerce.
2. Unobvious founders. We strongly believed that great founders and investable opportunities exist in all corners of the world and come in all genders, colors, races, nationalities, and backgrounds. We decided to invest across geographies and make venture capital inclusive.
Going into Latin America and East Asia in 2011, the Middle East in 2012, Africa in 2013 and Southeast Asia in 2014, we found markets with resourceful talent but little access to capital and venture capital know-how. Governments were eager to diversify their economy, and looked to Silicon Valley for inspiration.
This was not a long distance endeavor for us. To scout for the most promising startups, we established a local presence to understand the culture and market dynamics, whether in Kuala Lumpur, Mexico City, Taipei, Istanbul or Riyadh. Market expertise is essential to help build entrepreneurial ecosystems.
Today, close to half of our portfolio companies are based outside of the U.S., and so are nearly 40% of the unicorns in our portfolio. Just this year, we’ve seen a number of our non-U.S. investments cross the $1 billion valuation mark, including Clip and Konfio in Mexico, Paidy and SmartHR in Japan, InnovAccer in India, and Bukalapak which became Indonesia’s biggest IPO this past August–to name a few.
Now that we’ve built a top decile track record with our first global fund, we are putting more capital to work with bigger checks and moving downstream with our largest fund to date. Founders don’t forget their first checks, and in many cases we were their initial investor. We value those relationships.
It has been a rewarding journey for 500 Startups. As we embark on a new chapter as 500 Global, a name we have earned, we look forward to an exciting future.
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