It’s demo day season. This morning kicked off VC firm 500 Global’s Fall 2022 Demo Day, where more than a dozen startups gave their best pitches to potential investors — and customers. Entrants ranged from fintech and sustainability to edtech and developer tools, with a few standing out from the rest of the pack.
The event comes just weeks after Y Combinator had its biennial demo day, its first since the move from operations to the personal. 500 worldwide, previously branded under 500 Startups, has an accelerator that competes with YC. Both outfits look forward to supporting fledgling founders with money and advice in exchange for stock. YC has supported more than 3,500 founders, while 500 Global has supported more than 2,800 founders, according to each institution’s websites. Unlike YC, 500 Global has geographically specific accelerator programs, similar to Techstars, with an emphasis on areas such as Aichi, Japan, Cambodia, and Alberta, Canada.
That said, today’s debut from 500 Global is its first and flagship program, dating back to 2010 and fittingly, includes companies from around the world. All companies go through a four-month program, but start at different times, thanks to 500 Global’s slightly new continuous admissions strategy. Let’s dig into some of the batch’s moonshots and end with some notes from Clayton Bryanpartner and head of 500 Global’s Accelerator Fund.
For example, there is located in Taiwan rosetta.ai, an e-commerce startup that uses AI to let customers search for products — especially clothing and cosmetics — through specific attributes. Rosetta’s AI algorithm “sees” what attributes (e.g., sleeveless, ruffles, microbeads) a shopper might want as they browse an online store and builds a “preferred profile” for them, which merchants can use to cross-sell or set up promotions that trigger if it seems likely that the shopper will abandon their shopping cart.
It’s still early for Rosetta. But the company, founded in 2016, has raised $2.4 million in capital so far and claims to have clients including Shu Uemura, in which L’Oréal has a majority stake. The trick will remain to win customers over rivals like Lily AI, which similarly tries to match customers with products using attributes and AI models.
Elsewhere on the demo day, Lydia.ai ran through his health assessment service for insurance companies. Designed to avoid lengthy medical exams and forms, Lydia lets insurance plan applicants answer a few questions about their health — such as whether they have a chronic illness, have recently been hospitalized, and so on — via their smartphones. The platform then generates an abstracted health score supposedly devoid of sensitive medical details, which insurers can use for risk management and underwriting.
Lydia isn’t the first to try this. Health tech startup Fedo also algorithmically generates health scores, quantifying a person’s risk for disease and propensity to claim. The opacity of Lydia’s approach also raises questions, such as whether the algorithms explain demographic differences and historical biases in healthcare. But if the startup stays true to its mission – to secure the next billion people – it could be one to watch, especially given the capital (~$13 million) already behind it.
One of the more unique Demo Say startups that showcased was BetaStore, a supplier to the “informal” outlets common in Africa. Informal retailers are unregistered and unregistered retailers that do not report to tax authorities, usually operating out of open markets and stores. BetaStore acts as a commodity marketplace for casual retailers, providing access to staples such as dish soap, laundry detergent and all-purpose cleaner at wholesale prices and delivering them to the retailers (within 48 hours).
BetaStore customers can order products via chat, SMS or WhatsApp. On the back end, the platform provides sales analytics to manufacturers, which BetaStore notes can be used to make “data-driven” decisions to scale shipments.
BetaStore seems to be off to a strong start. Founded in 2020, the Nigeria-based startup claims to have distributed more than 140,000 goods to retail customers in Nigeria, Ivory Coast and Senegal and fulfilled more than 20,000 orders. Recently, BetaStore has started offering financing to retailers and plans to launch a buy now, pay later product in the coming months.
One year after the rebrand
Minutes after Demo Day ended, Bryan spoke to australiabusinessblog.com about 500 Global and how it is growing in an increasingly volatile (and competitive) market.
“It’s been a little bleak, but we’ve been telling our companies time and again that the miraculous reason is that 2021 was a phenomenal year for raising venture capital,” he said, fitting in with the news that US-based investors are currently sitting on $290 billion worth of dry powder. The accelerator’s main advice was to start fundraising earlier, prepare the company more before it goes to market, and stay smart about managing expenses. His advice these days is that startups should prepare for at least 18 months of runway.
It’s been almost a year since 500 Global was renamed from 500 startups, a move Bryan said was intended to reposition the institution as less of an accelerator, and more of a venture firm. It’s more than semantics; former batch entrants have returned to 500 for follow-up funding, during their Series A but up to their Series D.
“Historically we haven’t had any options, but now we’re going multi-strategy and working on funds at a later stage,” he said. “We have the question in our founding community, we have the question even within our partner community that they want access to more low-risk companies.”
He added: “We are very proud of our accelerator. It’s an important advantage… but now we have opened up other opportunities for us as a company that we are exploring with great enthusiasm.”
As for whether 500 will change its investment cadence, control size or focus — similar to YC as it prepares for a downturn — Bryan said more will come.
“We are not immune to the changes that are taking place in our ecosystem, we are aware of what other funds are doing and other programs,” he said. “Our program has delivered a strong performance over the past 10 years. But at the same time, we cannot rest on our laurels, and we must ensure that we have attractive deal terms.”