Dave McClure coming up with $5M fund under 500 Startup Wallah; is it just an appetiser?

21 Nov, 2012

Silicon Valley venture capitalist Dave McClure, who runs an accelerator and seed investment fund 500 Startups, is raising a new $5 million fund under 500 Startup Wallah as per a US SEC disclosure.

Although, the firm has not disclosed if it is targeting Indian startups, the name would suggest so. After all, 500 Startups has recently got active in Indian early-stage investment space.

When contacted, Pankaj Jain, the venture partner of 500 Startups in India, declined to disclose whether the new fund would be meant for Indian startups and said that he would neither confirm nor deny the development.

Till now, 500 Startups has funded a total of 10 startups in India and according to separate media reports, the firm is looking to back anywhere between a dozen or two local startups in a year.

Although McClure's entry with a formal fund is not a surprise, the small size of the fund may astonish many. 500 Startups typically invests up to $250,000 in a company during the first leg, which means the new fund would allow it to back at least 20 startups. We wonder if this is just an appetiser for Dave McClure who is an active angel investor.

Earlier this year, 500 Startups filed disclosures for its new fund worth $50 million and reports suggest that McClure intends to invest around half of the fund outside the US. But as of now, it is not clear whether the proposed India-specific fund means 500 Startups won't invest in India directly out of the global fund.

Silicon Valley-based 500 Startups has been looking to expand its India exposure and also ramped up its Indian presence last year. It hired Pankaj Jain, solely to look after the Indian investments and immediately after Jain was hired last month, the accelerator announced four new investments in India.

The new portfolio companies include WalletKit, TradeBriefs, Instamojo and gazeMetrix, and these became a part of 500 Startups 5th accelerator programme.

In another development, it also partnered with former Reliance Entertainment executive Rajesh Sawhney's GSF Accelerator for startups in the tech space.

Overall, it is still good news for startups looking for funds if, indeed, McClure has set up a maiden India-focused fund. It might be another seed-stage investor for backing Indian startups besides the presence of new-generation angel funds and existing angel networks.

(Edited by Sanghamitra Mandal)