500 Startups Joins Incubator Trend

Angel investor Dave McClure’s 500 Startups last month unveiled its 500 Startups Accelerator as a next-generation incubator for seed stage companies.

Each startup in the accelerator will receive between $25,000 and $100,000 in exchange for about 5% of equity. In return, the startups will have access to mentors, workspace, design resources and assistance developing customer acquisition programs.

Twelve startups make up the initial class of the program. They include Crowdrally, Baydin, InternMatch, Ninua, SpeakerGram and YongoPal. The dozen startups will work in 500 Startup’s new office pace in Mountain View, Calif. And at the end of their stint in the program, they’ll have an opportunity to participate in a pitch competition, the first of which is scheduled for early April.

McClure’s announcement comes a couple of weeks after Yuri Milner and Ron Conway’s angel fund SV Angel said they would give each startup in the Y Combinator program $150,000 on relatively easy terms—convertible debt. The current class of companies at Mountain View, Calif.-based Y Combinator is its largest group to date, with about 40 startups.

The investments at Y Combinator will be made through a new fund called Start Fund, managed by SV Angel’s David Lee. SV Angel will continue to invest, if it chooses to do so, in some of the Y Combinator startups just as they always have.

McClure says that his accelerator program shares some things in common with others, including Y Combinator. —Mark Boslet