The Global VC

Why We Announced Public Fundraising

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500 Global Team

500 Global Team

PUBLISHED

2014.06.27

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If a tree falls in a forest and no one is around to hear it, does it make a sound?

For over a year, I’ve been asking myself a similar question regarding fundraising for 500 Startups. Prior to the JOBS Act, it wasn’t legal for venture capital and hedge funds to talk publicly about their fundraising activities. Imagine not being able to talk about the *exact* thing you need to talk about. Imagine trying to sell something but not being able to advertise it. Anyone else see a problem here?

Of course, traditional funds have raised capital for years playing by these rules, and up until today 500 has also operated in the same way. However, it’s a more complicated and delicate sales process when you have to establish a “pre-existing relationship” before you can say anything about your fundraising… even if you think you’re talking to “accredited” investors. Now, the new general solicitation rules introduced by the SEC under the JOBS Act have changed the game, and, as of yesterday, 500 Startups is one of the first funds to take advantage of these new rules.

Therefore, I can now tell you we are currently raising our third flagship fund. I can tell you that the fund has a $100 million target. And, I can tell you that, if you’re a U.S. accredited investor and meet our investor requirements, you can invest in our fund. Seems simple, right? But for the last 80 years, I wasn’t able to do that (legally at least).

Before today, our lawyers (and likely the SEC) would have had my head for those comments, but I can now say them without fear given our new SEC filings and verification processes. No longer do we have to say “no comment” when a reporter or member of the public asks if we are fundraising. While that might not sound as sexy as releasing a new 3D-printing product or a video-enabled e-commerce startup, I’m excited by the opportunity.

The work we have to do on our fund is just beginning, but let’s give some credit to government officials for [hopefully] getting this one right. We should also give thanks to folks like Naval Ravikant, Kate Mitchell, the NVCA, and other good folks who worked hard for years to get the JOBS Act passed by Congress.

Lastly, if you’d like some info on our funds — feel free to apply at 500.co/invest.

500 Global Team

500 Global Team