How 500 Startups Helps Bitcoin Startups with $100k and Advice
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We know there are a lot of entrepreneurs out there working hard day and night to create the next big Bitcoin company. If this is you, you might be excellent at blockchain development, decentralized applications, analyzing financial charts, and navigating the Bitcoin community, but do you know much about the fundraising opportunities for your Bitcoin company?
If you don’t know much about fundraising for a Bitcoin startup, this article was written for your benefit. So pay attention!
There are more and more investors out there who are actively investing in Bitcoin companies. Some of these investors are large VC firms (like Andreesen Horowitz) who are putting $10M-$20M into Bitcoin companies (*cough* Coinbase *cough*), some of these investors are angel investors who are putting in $25k-$75k, and some are startup accelerators like Boost VC, YCombinator, and 500 Startups, who are typically investing $15k-$120k into very early companies as well as providing mentorship, connections to investors, and sometimes even office space.
Today we will be talking about accelerators, specifically 500 Startups. Why? Because we just interviewed both Sean Percival, a venture capitalist at 500 Startups who is focused on investing in Bitcoin companies, as well as Tom Longson, a CEO of a Bitcoin company that just recently raised money from 500 Startips.
1. What is 500 Startups, how does it work, and how much capital do you get and at what terms?
500 Startups is a startup accelerator in Silicon Valley founded by Dave McClure, a member of the “PayPal Mafia” AKA someone who worked at Paypal and made a lot of money.
How much does 500 Startups invest?
For the accelerator I do $100K for 7% of the company. For seed investments it’s usually $25K-$100K at the current terms of the round.
- Sean Percival, Venture Capitalist at 500 Startups
The 500 Startups accelerator program invests in ~30 companies at a time, in what is commonly referred to as a “batch”. Batches work out of the 500 Startups office for three months, receiving constant mentorship and guidance on building a company and fundraising. The three month program leads up to a “Demo Day”, where each company in the batch has a few minutes to pitch their business to a room packed full of investors looking for the next big thing.
“It’s like a fast forward for your business. They have a ton of resources, mentors, perks, and talks from the SV community. You learn the industry and gain the 500 network.”
- Tom Longson, CEO of GogoCoin (Funded by 500 Startups)
2. What is the most important thing, aside from capital, that companies get out of the 500 Startups experience?
This is an important question. Not all startups accelerators are the same, not all of them bring the same value.
“Network! I love the batchmates like NeuroWare.io and Bonafide.io. Additionally we really refined our message, and got introductions to Blockchain as well as other notable companies in the space. The program is the best thing a startup could want when you’re at the product stage and looking for a crash course on startup life with mentorship to aid us upon request.”
- Tom Longson, CEO of GogoCoin
It’s nice to see Tom and Sean agree on the answer to this question. If you’re starting a Bitcoin company, and you know absolutely nobody, 500 Startups can help.
“Huge network here in Silicon Valley. Lots of experience in company building and fundraising and finally, distribution and marketing.”
- Sean Percival, Venture Capitalist at 500 Startups
3. Ok, awesome, so how do I get 500 Startups to invest in me?
Excellent question! You’ve started working on your company, things are getting exciting, and now you want to see if 500 Startups loves you enough to give you $100k. Now what?
Here’s the secret tip we got from Sean.
“Send me a link to a live product so I can play with it. Still seeing too many things at the idea stage where it’s hard to judge the merit of the product/team. I suck at email so Twitter and FB are usually better for getting my attention.”
- Sean Percival, Venture Capitalist at 500 Startups
You also need to fill out this formal application to 500 Startups.
If you’re really feeling up to the challenge, we asked Sean if there was a Bitcoin company that doesn’t exist yet that he really wants someone to pitch him. Maybe you can just go make that and he’ll fund you!
“Yes a blockchain based solution to SEO (page rank) or simple storage solution (either public or private data).”
- Sean Percival, Venture Capitalist at 500 Startups
We hope you learned a lot from this article and the unique insights provided by Sean Percival and Tom Longson.
