The Key Differences between Y Combinator and 500 Startups
Earlier this year, I went through 500 Startups as an employee of one of the startups there. My friend went through Y Combinator, and we decided to share our experience comparing the two. 500 Startups and Y Combinator offer two different investment strategies, as well as two different models of cultivation, so choosing the right one for you is important.
- 500 Startups and its focus diversity
500 startups makes an effort to bring startups from all over the world into their program, as well as their portfolio. They’ve set up a number of funds focusing on regions throughout the world, such as 500 durians for Southeast Asia, 500 falcons for the Middle East, as well as many others. This widespread net of local funds makes it easier for individuals looking to join the incubator program to meet with partners local to their country or region.
Y Combinator on the other hand lacks these sorts regional funds, instead relying on its reputation to bring new ventures to its program in silicon valley. This model has proven successful in the past, but could rely too heavily on US based founders.
2. Investment funneling vs training
500 Startups focuses its efforts on training founders through training, in particular with a focus on marketing efforts. By putting a ‘batch’ of ~100 or so founders and early level employees into the same room they help to quickly build and share knowledge. batch founders are partnered with more experienced entrepreneurs who provide weekly advice.
Y Combinator on the other hand does not provide a common work area for all founders within a session, though unofficial co-working spaces may emerge. Instead it focuses its energy on bringing in speakers to weekly dinner meetings and frequent partnership meetings. Towards the end of the program, YC helps founders get investment and brings investors to speak with different founders.
3. Strength of brand
Ultimately Y Combinators largest advantage over others organizations is the incubator’s brand. Its brand can provides a level of pedigree to the startup and founder that can help secure funding, publicity and if necessary a job in the future. The value of YC’s brand is one that shouldn’t be discounted.
That said both organizations have fantastic reputations, and going through either program will certainly help you open doors. A 500 Startups alum should have an easy time finding a first meeting at any number of silicon valley VC firms.
Overall YC and 500 represent two different investment and program development models chasing which one is right for you can be difficult. If you are looking for more information on what founders have had to say about these incubators, check out https://www.frontiernode.com. It’s a place for founders to share their experiences and advice regarding venture capitalists.
