Investing in 500 Startups. Boom!

I met Dave McClure at Gnomedex 2007, where we argued over the future prospects for Spock, had sushi at Shiro’s (and saw Juliet from Lost), and otherwise enjoyed ourselves. (That’s also where I learned Dave Schappell knew everybody, and met probably ten other entrepreneurs in Seattle who I still talk with semi-regularly – no single conference has ever had so great an impact on my career.)

Well, since then, Dave’s gone from a little macher to a big macher, and I’ve had fun watching on the sidelines. I’ve bought into the 500 Startups model from the beginning – in particular, the idea of a quantitative, high-volume investment strategy that both forces data-driven decision making and makes allowance for the fact that nobody knows anything. I have some friends in 500 Mentors who are impressed with the talent and investment choices Dave and the 500 team have been able to bring together, and it’s clear that they can avoid getting caught up in the current frothy valuations coming out of Y Combinator 2012 – which may or may not be a signal of a bubble, but certainly reduce IRR in everything-but-heroism (when you won’t care anyway because you’re rolling in money).

I’d been thinking for a while about committing us to investing in startups, and so when I learned/realized that 500 was raising a second fund – from Todd Sawicki, another Gnomedex 2007 alumni – I figured I’d see if they would take our pittance (even though it’s still larger than our 10% commitment). Well, our money might be tiny but it’s still green, so we’re in: Rooster Park will be a Limited Partner in 500 Startups II.

I’m very excited for us to be part of #500strong. I’ve always wanted to be part of a cult that takes my money, after all, and this one allows me to stay married. (I think? I didn’t read every page.)

My only regret about this choice is that the investment isn’t centered in Seattle, which is where the majority of our business is located and where we’ve chosen to live. While 500 Startups is likely one of the largest non-local angel funds with investments in Seattle, and this fund is committed to 25% of its investments in non-Silicon Valley US locations, I’d like to provide more direct local support next year.