Dave McClure

The Twenty Minute VC: Venture Capital | Startup Funding | The Pitch · 20VC: 500 Startups' Dave McClure on Whether Unicorns Are Necessary…

• Does the World Have Enough VCs and VC Money

  Dave McClure thinks that although in hot startup areas, like Beijing and Silicon Valley, there is a lot of money, the rest of the world has very little in comparison.

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• What Did Dave McClure Learn From the PayPal Team?

  Dave McClure told The Twenty Minute VC he will not quite claim a seat in the PayPal Mafia, because he has not built a billion-dollar company. He did work at PayPal. David Sacks was his boss and later sold Yammer to Microsoft for about a billion dollars. McClure worked with Steve Chen, Chad Hurley, and Jawed Karim before they started YouTube, and watched Peter Thiel, Max Levchin, and Reid Hoffman. The lesson was pressure: ship product and marketing while fraudsters stole money and eBay and Visa competed with you. Microsoft, Yahoo, and Google found a model early. PayPal, like Amazon and Facebook, grew fast on a harder road, and its people learned to change the product in order to survive.

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• Does a Fund Need to Invest in a Unicorn Startup to See Good Returns

  It helps but is not a requirement, depends on what you are trying to accomplish.

  All of Dave's early winners were between a 10 to 20 x return on investment, about a 3x return on his overall portfolio, with an investment return period of around seven or eight years.

  With 500 Startups, they aimed to find a "unicorn" only 1-2% of the time, but given that low probability of that even, their portfolio size needed to be a minimum of 50 to 100 companies to even have a shot at that.

  So when thinking about investment, you need to know what return multiple you are trying to hit, how likely your companies are to return, and then you would know whether or not you need a unicorn to do it, or how man

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• What Did Dave McClure's Early Wins Have in Common

  Although founders were compelling and the ideas were good, mostly non of the early winners in Dave's portfolio were oversubscribed. They were all raising money in 2008-2010 times when fundraising was tough.

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• How Did Dave McClure Start Investing in Startups

  After leaving PayPal around 2004, Dave started investing recreationally. After he'd invested in about 13 companies over the next four year, some of them turned into 100M+ exists.

  Dave ended up working for Founder's Fund with Peter Thiel and Sean Parker for about 1.5 years, and eventually got together with Christine Tsai to raise their own fund, 500 Startups.

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• How Did Dave McClure End Up in Silicon Valley

  From Dave's words: "I graduated from Johns Hopkins in Baltimore in 88 and came out to California in 89. Did some consulting, which grew into a small company. Did some work with Microsoft and intel on a few others from 94 to 98, grew that to about 20 people. Screwed up everything I could about running a small business, but still managed to get a very small exit out of that around 2001. Got a job working at PayPal and was there through the through the I. P. O and through the sale to eBay and then a few years after that, until around 2004. Met a lot of really amazing people there, some of whom created some recognizable names in the Internet."

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• Who Is Dave McClure

  Dave McClure is the founding partner of 500 startups, made over 1500 investments, including Twilio, Send Grid, and Intercom. Dave was previously on the Investment team at Founder's Fund, and was head of marketing at PayPal pre IPO.

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