500 Startups raises $85M in third global VC fund

Silicon Valley-headquartered startup accelerator-cum-early stage VC fund house 500 Startups has closed its third fund with $85 million, a sixth short of its target of $100 million, according to The Wall Street Journal citing sister publication VentureWire of Dow Jones.

VCCircle is part of News Corp, which also publishes The Wall Street Journal and runs news agency Dow Jones.

Tokyo-based Dentsu Inc, Yahoo Japan and Malaysia Venture Capital Management Berhad, a venture firm backed by the Malaysian government, participated in the fund, Dave McClure. founder of 500 Startups, told VentureWire. He added that US-based limited partners such as pension funds, endowments and funds-of-funds, shied away.

"US institutions took exception with the firm's "index fund" approach to venture capital and the small stakes it takes in companies, among other reasons," McClure told the news agency.

500 Startups was founded in 2010 by McClure, a former executive at PayPal. Its network includes more than 750 startups, 200 mentors and 1,000 entrepreneurs across the globe. 500 Startups typically invests up to $250,000 in a company during the first leg. Its preferred sectors include financial services, gaming, payments, SaaS and education on mobile and web.

It has also backed several Indian startups from its global fund and had floated an India-focused micro VC fund 500 StartupWallah with a modest target corpus of $5 million in late 2012, along the same time 500 Luchadores (regional fund focusing on Latin America) and 500 Durians (regional fund focusing on Southeast Asia) were launched.

However, it never announced any fundraising milestone of 500 StartupWallah even as the other two regional funds raised money.

This March,it had talked about reviving the fund.

In an email response, McClure declined to comment on the new fund.

Last month, it invested in Applied Life Pvt Ltd, which runs a jobs and career community for women Sheroes.in along with other investors.

It has also funded several other startups in India through its international fund like TradeBriefs, Instamojo, ZipDial (acquired by Twitter), PriceBaba and gazeMetrix.