Event Summary: 500 Startups Premoney (June 2014)

I wasn’t able to attend 500 Startups’ Premoney conference in San Francisco last week (something about a 5 month old baby at home, I suppose) but I tried to follow along online from DC.Some raw notes & commentary below…

Summary The big questions that surfaced had to do with the existence of a tech bubble, the benefits of co-working spaces, and the Silicon Valley ecosystem. In addition to analysis of these issues, the speakers also explained their strategies for success; McClure spoke about crowdfunding and volume of accelerators, while others talked about market perceptions and statistics.

On Bubbles With regards to the possibility of a bubble, the speakers agreed that the answer was more complex than a yes or no. They said that the startup market is “bifurcating”, with seed investors putting money into new companies and big-name investors pouring capital into well established ones. Although this could be a sign of a future bubble, distinguishing it is made difficult by the increasing time companies are taking to go public. The overall trend is that mid-level VCs are decreasing while focus continues to center around the big players.1

On Coworking As for the issue of co-working, there is considerable debate. Altman, of Y Combinator is against the model, arguing that it can be distracting and that it can prevent a start-up from forming a unique identity. Furthermore, shared working spaces could potentially hinder growth: it would be logistically difficult to have hundreds of startups in the same place. Other accelerators, however, including 500 Startups, argue that co-working spaces are beneficial, allowing for collaboration, resources, and easy access to founders.

Location Silicon Valley is the center of the potential tech bubble and co-working spaces, but for as much controversy as these issues bring, the conference’s speakers all agreed that the Valley is still ripe for success. Altman wants to bring all of YC’s companies to the area for a three-month program to take advantage of the unparalleled ecosystem full of VCs, tech talent, and startup veterans.3 He estimates that two-thirds to three-fourths of the program participants remain in the Valley afterwards. Though this is the case, Altman said that he still looks outside of the Bay Area and even the U.S. for talent. Additionally, he said he will soon be releasing data about YC’s increasing investments in women-run companies. For 500 Startups, the focus is a bit different. McClure acknowledges that 500 Startups is considerably behind Y Combinator, but said that the gap is closing. He plans to take advantage of new regulations via fundraising its current $100M fund through “‘crowdfunding’ through ‘accredited’ investors.”