E091: with Dave McClure, Founder of 500 StartUps



about this episode

Our guest this week is Dave McClure, Angel Investor and Founding Partner at 500 StartUps. Jason and Tyler rate our newest Shark Tank call ask get your votes on the show itself!

Uber angel investor Dave McClure is chatting with us. The shark tank takes another victim and Tyler will be reading the news headlines.

We’re racing towards 100 shows. Our list of guests is epic. We’re going to have an epic guest for our 100th show.

Go visit the new Calacanis.com which has been redesigned!


Dave McClure – 500 Startups/Angel Investor

[some technical difficulties – trying callback]

Jason and Tyler discuss angel investors and the new trends of doing smaller investments with a fund.

Dave is back!

Jason and Dave discuss the new fund raised by Dave for his 500 startups. Dave discusses some of the other funds he’s run.

Dave describes his angel investing philosophy. Small is beautiful. Being very capital efficient preserving some smaller exits. Jason asks about the investing valuation that Dave targets. 2-4M pre money is the sweet spot. This preserves the options for a reasonable M&A.

Dave talks about some of his startup investments, including Twilio, Rapportive and a few others.

[Restarting the Skype feed-again]

Dave is back – again

Dave discusses his average investment size (about 100K per). Dave has 60 investments so far this year. The fund is focusing on product, design and distribution. Companies should be conservative on the revenue model. They still have a focus on technical founding teams with great bench depth.

Dave and Jason discuss the impact of YCombinator, AngelList and VentureHacks and how they have had a huge impact on startups.

Jason and Dave discuss the valuation bubble/angel bubble and the impact of higher valuations on angel investments. They discuss the impact of the large VCs and how the angel investments are impacting their processes.

Jason asks about the value of choosing between super angels and large VC firms. Dave clarifies that circumstances for which each make sense. Big firms are looking for big exits.

Dave discusses the one he missed. UberCab. He would have liked to have been in UberCab. Deal flow is very active, which made him miss several great companies.

Dave discusses what he looks for in an entrepreneur. They break rules and are creative and passionate. A little bit of crazy is good. Growth oriented and operational/revenue focused.

@ramvaz – Do you look down on MBAs? – Dave explains his view of MBAs and business plans. It’s BS. Better to know your business and market rather than spend time building a BS business plan.

Dave and Jason discuss Angelgate! Dave categorically denies any collusion is going on. Each discuss their thoughts on AngelGate.

Jason discusses how to get in touch with Dave and when the right time is to discuss the project with Dave. Dave says that the prototype is necessary for anyone without a track record. The best way to get his attention is through a CEO in one of their portfolio companies.

Dave discusses that they have 90 mentors and 60 portfolio companies who would be great advocates to get in front of him/500 Startups.

Shark Tank

Chas Wagner – Fanatics

Gowalla or GetGlue for sports fans. Checkins for games, tailgating and other social events around sports. Travel, geo-targeted deals are all part of the offering.

P: 7-8
I: 5

P: 8
I: 5

Jason and Tyler discuss the niche nature of Fanatics. Chas explains why the idea makes sense. Jason discusses that Fanatic is doing the ‘Kitchen Sink’ process by adding elements of travel and deals. He suggests looking for a significant pain point and focusing on that. Tyler suggest looking for the emotional connection.

Thanks to everyone for watching.

more episodes