Startup investor Dave McClure’s venture firm 500 Startups has closed its third global fund, at $85 million, 15% less than its original target. The funds have been pumped by Tokyo-based Dentsu Inc., Yahoo Japan and Malaysia Venture Capital Management Berhad, a venture firm backed by the Malaysian government.
“It wasn’t an easy road,” Mr. McClure said. He added, ” U.S. institutions took exception with the firm’s “index fund” approach to venture capital and the small stakes it takes in companies, among other reasons”. As per him, the struggling phase of his company hasn’t really affected the firm’s pace in raising more funds. In fact, it is already looking forward to raise the fourth round soon, reports WSJ.
All three of 500 Startups’ main funds had a net investment rate of return of more than 20%, claims the firm, as of the end of the second quarter. Its second fund appears to be outperforming industry averages. The firm’s 1,200 portfolio companies include such startups as Credit Karma Inc., Intercom Inc., Twilio Inc., Talkdesk Inc. and Udemy. It has plans of investing in some 350 to 400 startups this year, confirmed McClure.
“I just wish institutional investors paid more attention to IRRs and performance and less to how much I dress in T-shirts,”McClure stated.