500 Startups closes second venture fund with less than the original target corpus

Silicon Valley based incubator-cum-seed fund 500 Startups has closed its second fund with $44.1 million in capital commitments, as per a report by Fortune citing sources. This marks a climb-down for the fund from its original target of $50 million and poses a question mark over the concurrent fundraising for separate country specific micro funds including one for India.

The Fortune report said a good chunk of the second fund is already committed and 500 Startups may look at a shorter lag for its as yet unannounced third fund as compared to around two years gap between the debut fund and the latest initiative. It had raised close to $30 million in its first fund in 2011. The report said 500 Startups founder Dave McClure declined to comment on fundraising but said that the organisation has “learned a hell of a lot” since the launch.

Interestingly, SEC filings show 500 Startups had last month cut the size of the fund 500 Startups II to $32.8 million and had said it has raised the sum.

We have emailed 500 Startups for more clarity on this and will update the copy as we get a reply.

500 Startups provides up to $2,50,000 funding to early-stage technology companies. Its accelerator also picks a new batch of startups twice a year and incubates/mentors them apart from providing them with capital. In India, it has invested via a co-investment model with various other funds and has picked many Indian startups for its accelerator programme as well.

The last batch, which was announced in May this year, had five Indian companies of a total of 28. The batch previous to that also had four Indian startups. In October last year, 500 Startups roped in Pankaj Jain as a venture partner to lead all its investments in India.

Founded in 2011, the fund has so far made over 500 investments in more than 35 countries. Its portfolio companies from India include Kartrocket, Zipdial, Instamojo, gazeMetrix, Walletkit and Tradebriefs.

Last year, it floated what appeared to be an India focused micro venture fund with a target corpus of $5 million. It is yet to announce a formal closure for the fund christened 500 Startup Wallah.

This was part of a string of regional micro funds floated by the group. It also launched a $5 million fund aimed at Mexico and more recently a $10 million fund for Southeast Asia.

(Edited by Joby Puthuparampil Johnson)

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