Silicon Valley-based startup accelerator and seed fund 500 Startups is created by founders, for founders, partner Paul Singh says.
At a fireside chat hosted by Startup Grind Toronto, the venture capital fund manager dished out tips to startups on how to attract funding. He also wasn’t shy about inviting startups to approach 500 Startups with their pitches.
“Make yourself known,” he said. “We have money to spend and we want to write cheques.”
Almost true to its name, the accelerator currently counts more than 420 firms amongst its funding recipients. Not bad considering that it closed its first round of funding in July 2010. It has invested in Canadian firms in the past, including Montreal-based High Score House and Toronto-based Cadee.
When’s the right time to raise money? When your users are “pulling the product out of you,” Singh says. It’s best to hit the market and experiment with an idea and then adapt to user feedback before seeking investors to get on board. But don’t endlessly pivot your business.
“All companies fail – not because of competition – but because of creative suicide,” he says. Don’t get bogged down in endlessly iterating your business and chewing up all your resources in the process.
Singh faced his own challenges as an entrepreneur. During one particularly ambitious period in which he was launching one new product per month, he had two ideas take off and looked like they’d be real money makers before different fatal flaws doomed both of them.
Mail Finch was a service Singh created that allowed users to upload a PDF document and provide a mailing address – for $3 the service would print and mail the document for you. The product caught on and grew to the point that it was processing 30,000 orders per month. But mailing that many documents is just too labour intensive, Singh says, and he didn’t know how to scale it properly. So he killed the business.
Another product Singh created, Grid, was designed as a white label service that could be resold to different Web site operators. But after running into an issue where one of his partners connected to another product of his claimed ownership of Grid, Singh decided to abandon the project and delete the source code. “If I couldn’t have it, nobody could,” he says.
Before Singh jets out of Toronto, he’s entertaining five startup pitches from local firms tomorrow.