"We're okay with the companies failing," Shai Goldman, a 500 Startups venture partner, said Thursday night to the group of eager entrepreneurs at the global accelerator's Boston info session held at Privy. Friday, August 16th is the last day for the startups to apply to the Mountain View, California-based business accelerator.
500 Startups pushes the participating thirty some-odd startups to put in the long hours and see if the idea and, perhaps more importantly, the people behind the idea, have the chops to make it in life after 500. If a startup goes under, then "we're saving the founder two years of his life," Goldman pointed out. The entrepreneur is then free to pursue a different career path or join someone else's startup "rather than dicking around for a few years."
While the above approach sounds like a disheartening message for an accelerator to be sending to the next generation of Steve Jobses, Jeff Bezoses and Arianna Huffingtons, it's a pragmatic one. About a quarter of startups fail within their first year, and it only gets worse from there, according to 2013 research from Statistics Brain. Thirty-five percent are bound to bust in the second year. And even if your team survives that round, the third lap is likely to do you in with a 55 percent failure rate.
"All 30 [participating companies] aren't going to break the bank. We want five or six who kill it and 20 who die now and don't waste [investor’s] money," continued Goldman.
Privy classifies as one of select few who killed it. Founders Ben Jabbawy, Jake Cohen and Farrell McClernon headed West last year to participate in the accelerator's sixth class. The Boston-based local marketing startup scored $1.7 million in Series A funding from Atlas Ventures, 500 Startups [which often gives backing to its batches] and a handful of angel investors when it came out of the accelerator last July.
“[500 Startups] is NOT a silver bullet," Cohen said. "It's not a 25 million dollar check. It's not an exit."
No matter your company's success rate, all 500 Startups participants gain access to an awesome web of networks, including investors on both West and East coasts as well as business folk worldwide. But that's after the program. "Its like The Hunger Games," Cohen said of locking down financing during the accelerator's demo days. "You’re all friends until your not friends."
The crew at Privy's new Chinatown digs last night, however, seemed ready and willing to enter the arena.
- Shireen Taleghani and Scott Sundvor hope to move their company 6 Sensor Labs from MIT's accelerator over to Mountain View to build upon their gluten sensor consumer product.
- After working in an incubator in Nashville, co-founders Anup Gosavi and Balaji Vishwanathan are working on Zingfan, a crowdsourced investment guidance site that provides "social sentiments for smart investing."
- Babson grad Joshua Goldberg's startup Beeinplay allows athletes and sports fans to reserve a local open court, rink or field for playtime.
- Dan Nevius from MentorSite, an online platform designed to enable people to interact with and receive advice from a network of mentors around the world, wants to move West to get the site in full swing.
- Also at the event was Tufts grad Kyle Nichols-Schmolze, who is currently working with a few others in Privy's office on his startup JumpOffCampus, a site focused on helping hook up students with off-campus housing nationwide.
