You can apply to the next accelerator class here.

Initially posted August 2014, updated March 2016 by Elizabeth Yin.

We’re kicking off our second batch of companies in the shiny new 500 Startups San Francisco accelerator program, otherwise known as 500 Del Norte. We’d like to take this opportunity to tell you a bit about what we’re looking for and how we select companies.

We get thousands of applications for 30-50 slots 28 slots. While we’re much more concerned with quality than quantity, if you’re applying to a competitive accelerator you should understand that you will be one of many applications.  You also won’t hear back for quite a while, as we need time to process through all of them.

Over the years, we’ve evolved what we’re looking for in our accelerator companies.  Though definitely not a hard and fast rule, a typical company coming into our accelerator these days has these characteristics (BLASTR):

• Balanced, smart team that can learn quickly and be persistent
• Launched product (though we’ve made exceptions for highly regulated industries)
• Aspirations to use our growth resources to help grow like crazy (2-10x revenues in 4 months) and/or raise a big seed round in the Silicon Valley
• Strong understanding of the customer and unit economics behind the business
• Traction.  Early but recognizable traction, though not every company fits this bill – we have certainly accepted very high tech companies in areas such as synthetic biology, IoT/hardware/robotics, fintech, etc that have had earlier traction.
• Raised some money previously – we are often no longer the first check into a company (again not a hard and fast rule)

Tip 1: Apply Early

We start reviewing applications on a rolling basis as soon as the application window opens. More than half of the applications come in on the last day. If you want us to spend more time on your application, get it in early.

Tip 2: Put effort into your application and give as much detail as possible

We don’t have the luxury of putting hours into reviewing your application. We need to see something interesting that makes us want to dig in.  For example, when we ask to see revenue broken down by month, if you write just one total revenue number, we’ll automatically gloss over your application.

We filter these applications with the help of our mentor and founder networks. Our goal is to have at least four people look at every application, ideally with expertise in the space you’re working in. We couldn’t do it without these awesome folks (Thanks 500 mentors!).  These days, we have over 100 people on staff at 500 Startups and do all selection and due diligence in-house.  (Thank you, though, to our mentors for their past due diligence efforts and for continuing to come in to help coach our companies!)

We also look extra hard at companies that are referred in by our founders and mentors. A personal recommendation from someone we trust isn’t a guarantee you’ll get an interview, but it’s pretty valuable.

Tip 3: Figure out who you know in the 500 network

Ask them if they would be comfortable recommending your company. If you don’t have this network, consider reaching out to 500 mentors who would understand your business and asking (politely) if they would give you some feedback. Don’t be a creep about it. If they dig your company, you can ask them to give us their thoughts.

Our goal is to narrow the initial applications down to about 100 companies we interview. We do these interviews over 3-4 full days. We split up into teams of two, and each company gets interviewed for 15 minutes. You’ll usually do three interviews.

We do this to avoid groupthink, and to give startups the chance to shine even if one interview doesn’t go well. Interviewers include members of the 500 Investment Team, Distribution Team, other 500 staff, and sometimes 500 mentors.    To make our process more fair, we no longer care about who you know in the 500 network.

Tip 4: Come prepared

You only have 15-45 minutes per interview, and we will give each company 1-3 interviews before making a decision.  You need to convey who you are, why your business is interesting, and be prepared for us to dig into everything from your unit economics and customer acquisition strategies to long-term plans and where you met your co-founders.  Because the focus of our accelerator is on growth, you will have at least one interview that is focused on growth.

At a minimum, with regard to customer acquisition, you should understand:

• Who is your customer persona?  Describe the day-in-a-life in great detail.
• What are your margins?
• What is the average lifetime value (to date) of your customers?  Does this change depending on the segment?
• What is the average cost to acquire a customer (to date)?  How does this change across customer acquisition channels?
• What customer acquisition channels have you tested (to date)?
• What does retention (or churn) look like?
• How are your cohorts changing over time?

Tip 4.1: Research the program.

Know what our terms are, know how we work and talk to startups who have gone through the program recently (in the last 6 months).  The program has changed in the last year quite a bit, so if you talk with people who went through the program 3 years ago, it won’t be a good reflection of what you’ll get.  It reflects poorly on you (and is bad business) to consider selling a chunk of your company to someone without understanding deeply what you’re getting in return.

Hint: our accelerator focus is on customer acquisition and raising seed rounds in the Silicon Valley.  We pair each team up with coaches — who are on our staff — who have previously worked at fast growth startups before in marketing or sales roles.  We also pair teams up with fundraising coaches.

Tip 5: Don’t have a script

Go into the interview with specific questions. We don’t have much time, so remember that your job is to fill in the gaps, not to hammer home what you think is important.

After interviews are complete, we schedule a half-day team meeting to come up with a batch. We start with the companies that we all agree on, either positive or negative, and this usually gives us the first 10-15 companies. If you have a phenomenal founding team with several exits to your name, a million dollar run rate, 50% month-over-month growth, a beautiful product, and an unsexy-but-giant market – well, you’re almost certainly in. Figuring out the other companies is where the fun (and arguing) begins.

For companies that don’t have all the boxes checked, we look to each other for a all companies we accept, we look for a champion. We believe groupthink is a big problem in venture capital, so we encourage debate and empower anyone on the team to take a controversial position.  If there is someone on our team who really wants to champion your deal, then you’re in.  This likely also means that he/she will be at least one of your coaches while in the program, and oftentimes he/she is championing you, because he/she really gets your business and space from past experience.   The good news is that you’ll be meeting anywhere from 1-3 people from the 500 Startups team, so often, you’ll have several chances to impress at least one person.

Tip 6: Take feedback and iterate your business quickly Find a champion

As discussed above, even if all of us don’t “get” a company, that’s OK. We all have different backgrounds and different interests. Find interviewers who are exciting about what you do, then give them the information they need to be your champion. One ‘hell yes’ usually beats out any other strong negative votes.

After hours of arguing, we end up with a list of 35-40 companies we think are really interesting. Sometimes we are impressed by the founders, but we think the company is too early to benefit from our program.  Because our focus is on growth, we need our companies to hit a certain baseline of customer-understanding in order for us to be able to help with growth.  If our companies have no idea who their customers are or what customer acquisition channels are promising, then it’s really difficult for us to be helpful.

We believe an accelerator program should help companies refine their strategy, break through concrete bottlenecks in the business, and raise reasonable seed rounds at good valuations once they’re done with the program.

We think a lot about companies getting their money’s (equity’s) worth out of us. If a company is too early to get ready for demo day and achieve their fundraising goals, our accelerator is probably not a good fit.

We try hard to give these early companies concrete feedback on what we think they should be working on – then invite them to reapply for our next batch. This isn’t BS. Timing matters with accelerators, and we want you to get the most out of ours.  We offer our accelerator 4 times a year, so at any given time, we are constantly evaluating companies for the next batch.

In some cases, if you apply early enough and we are able to get you feedback quickly, you have time to even iterate and grow your business such that we can revisit your company again for the same batch.  We don’t see a “No” as a permanent no.  In most cases, it’s a “No for now.”  We’ve had many companies apply multiple times and then get in.

Tip 7: Tell us what you’ve learned

Markets are Darwinian. The most important skill you can have is the ability to adapt quickly. Tell us what you’ve learned. What were you wrong about? What secrets have your customers told you that give you an unfair advantage? We’re suckers for quick learners.

Tip 8: Tell us your vision (why you are doing this?), and how you’ll grow

Startups grow or they die. Where are you customers? How will you reach them? Tell us what you’ve done. Unscalable growth is fine (and reflects hustle), but ultimately we’ll need to see a path scalability. If you’re small you know we can help you grow, that’s really exciting.

We also want to understand where this goes in the long term and why you’ll be building this company for the long-term.  If you’re just building this for a quick-flip, we’re not the right partner for you.

Tip 9: Make sure we understand your traction

Traction comes in many forms, with the most obvious being revenue. However, revenue isn’t the only form. This may sound obvious, but we’re looking for people who have executed – not people who will execute sometime in the future. Make sure we understand what you’ve done. This is way more important than what you think you can do.

I hope this is helpful. We’re grateful for all the amazing companies we received applications from, and look forward to having some of them in our first San Francisco accelerator. Hopefully this will help you if you choose to apply to our Spring batch in Mountain View. Applications open NOW, so apply here.

Tip 10: Do what’s right for your business.

VCs resonate with simple stories and metrics, so its natural for companies to try to play to the test. But whether you join 500 or not, success comes from being an expert in your business and doing the right thing for it and for your customers. Don’t adapt your business to our needs, but please speak slowly when explaining it. We are VCs after all.

We’re grateful for all the amazing companies we’ve received applications from over the years and are looking forward to our next cohort!