2020 June-July Analysis Featured

500 Startups launches accelerator program in Georgia

While the first quarter of 2020 sent global markets tumbling and investors clutching their pocketbooks, San Francisco-based venture capital firm 500 Startups made a splash on Georgia’s growing startup scene by launching the country’s first international accelerator program in the capital of Tbilisi.One of the most active early stage global VC firms with more than 2,400 investments spanning more than 75 countries, 500 Startups took in its first cohort in June, offering 15 promising local and international tech companies the opportunity to study the fundamentals of product development, market research and other topics crucial for the success of a company in the early stages of development.

With its programs, 500 Startups also aims to help develop an innovative startup ecosystem in the country, which makes it rather atypical for a VC:

“Our mission is to help create tech ecosystems outside of Silicon Valley, because we believe that talent is everywhere, but opportunity is not”, Managing Director of 500 Georgia Pedro Vieira told Investor.ge. Supported by the World Bank, the Georgian Innovation and Technology Agency and the Bank of Georgia, the 500 Startups program will last 16 months, and will train around 30 early-stage tech companies in two separate batches.

“In the first phase, which will last around four weeks, we will go over the foundational topics that they need to establish their companies, and look at product-market fit – a measure of how much the market wants a product or service”, Vieira explains.

In the second stage, companies will have an eight-week period of remote testing, where they will be conducting experiments to help them grow faster with weekly feedback from 500 Startups mentors. Companies will then enter what the VC firm calls an “intensive acceleration period’ of another six weeks, where startups will delve deeper into topics such as marketing and sales, pitching and fundraising, and topics related to global growth and scaling.

The program’s fourth and final stage, coronavirus permitting, will include a Silicon Valley exchange, where startups will have the chance to network with other companies, founders and investors.

The current batch will complete training in October. Applications for the second cohort will begin in September, and will commence training in November.

500 Startups’ arrival in Georgia means much more for the country than training opportunities for the country’s startup scene, Vieira says:

“When we enter these frontier markets, the startup ecosystem is generally still nascent, which presents an opportunity to educate investors in addition to founders. We also bring with us a standardized set of investment tools and guidelines, which empower both founders and investors. Already we have seen the Bank of Georgia committing capital to companies going through the program, and investors are showing curiosity and asking questions. Hopefully as the program goes on, we will see more angel investors and more local investment activity.”

The first batch of companies includes a colorful mix of industries, including several companies that have come in from abroad from the US, Slovakia, Ukraine, the UAE, Poland and Estonia.

Of the 15, nine are Georgia-based companies, and include Georgian car repair service CARU, fashion shopping marketplace Phubber, web browser for productivity Stack, multichannel customer engagement software LiveCaller and QuickCash AI, a banking platform that provides automated scoring to assess a business’ creditworthiness, to name a few.

The 500 Startups program would have kicked off earlier were it not, of course, for the outbreak of the coronavirus. After biding time to see how the pandemic would progress, the firm decided to launch in virtual mode.

“We’ve had a lot of remote experience already, so we weren’t too concerned about doing it virtually”, Vieira says. “We’ve already had two big experiences with good results, including Demo Day at our flagship accelerator in San Francisco, where the results were even better than our last in-person event. Approximately 1,300 vetted attendees registered, twice the usual size. Outreach from investors to startups also doubled.”

And because 500 Startups has personnel around the world, “it was easy to adjust. We had a program going on in Riyadh, Saudi Arabia when the pandemic hit, and the second half of the program was done remotely. Participants found the virtual program as impactful, if not more so, than the in-person portion of the program”, Vieira says.

Lastly, 500 Startups presents an opportunity for companies to scale globally. Though the VC firm is not funding companies in the Georgia accelerator program, it is giving them the tools to make an impact beyond their home market and attract funding.

“[Through] these programs, companies are able to get on our radar much easier. So we go from working with them, seeing how they are doing and if they represent good opportunities for investment, the we definitely consider [funding] them.”

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