500 Startups is proud to announce the launch of DistroFund, a $10 million allocation from 500 Startups main fund dedicated to post-seed, pre-Series A companies looking to scale and operationalize their growth marketing function. This new fund will be managed by 500’s in-house growth team aka “Distro” team. (note: Distro is the 500 nickname for “Distribution” or customer acquisition).
DistroFund will initially invest $100K-$250K in 25 post-seed /pre-Series A companies over the next 18 months, with 50% of fund capital reserved for follow-on investments in companies that raise Series A. $50k from the first check will be earmarked to pay for growth and marketing resources. DistroFund will invest in both existing and new 500 portfolio companies. Ideal candidates will already have demonstrated growth and/or revenue, and are looking to operationalize their marketing to continue predictable growth at scale.
“After working on growth strategies with many of our accelerator and seed-stage companies, we realized we were essentially doing due diligence on their future Series A financing. Given our in-depth knowledge of their customer acquisition costs, unit economics, and risk profile, it was a no-brainer to consider investing in the more promising companies” says Mathew Johnson, DistroFund Partner.
The 500 Distro Team began life two years ago as an in-house portfolio services function, working with our accelerator and seed-stage companies to help them grow customers & revenue. Since then, this hands-on expertise in growth and distribution has become a top selling point for founders who join 500. Distro Team members are previous founders, growth marketing leaders, and investors from notable startups and established technology companies. The 500 Distro Team will continue to work closely with each DistroFund investment to scale their business.
Justin Potter, CEO of Cleanify says: “The 500 Distro team was extremely valuable throughout our time in the accelerator. We beefed up our analytics, started testing new channels, put together a strong referral program and more. The team has been instrumental in helping bring our acquisition costs down, while increasing sales, and preparing us for VC funding. We wanted to continue working with the Distro team to attack more channels, dive deeper into our analytics and continue educating our team.”
Diishan Imira, CEO of Mayvenn say: “We worked with the 500 Distro team after graduating from Batch 6 when we had found product/market fit and needed to begin to scale. Over four months we worked intensely with them, creating an innovative online-to-offline funnel that had our CPA’s so low our other investors thought that we were lying! One year later, we still use the same fundamentals to manage our marketing and optimize our funnels today.”
500 DistroFund has already made three investments to date in Cleanify, Pijon and one unannounced company.
DistroFund is now accepting applications for companies to present on-stage at Weapons of Mass Distribution, 500’s conference covering growth marketing on May 1, 2015. Three finalists will pitch to a panel of top VCs and one winner will get an investment offer from DistroFund. Apply here.
DistroFund is also deploying capital through a series of 2-month Distro Dojo growth accelerators. Seed-stage companies can expect to gain 6-12 months’ worth of marketing progress in a 1-month period by bringing multiple intensive growth resources to bear on their business all at once. 500 Startups successfully piloted this program in Malaysia in 2014 and will be expanding it to other global locations in 2015.
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