Why 500 Startups Decided to Launch an NYC Coworking Space and Not an Accelerator

"There’s actually more accelerators in New York than there are in the Bay Area."

Mr. Goldman

Shai Goldman, a venture partner at 500 Startups, recently announced another sign of the seed stage fund’s growing interest in New York City–besides poaching a Silicon Alley stalwart like Mr. Goldman, of course. This February, the firm plans on opening a coworking office at 28th Street and Park Avenue in the Flatiron, not far from General Assembly.

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500 Startups is known for its global focus. The only physical space the firm had up until New York was a corporate office in Mountain View, “which is where we run our accelerator throughout the year,” Mr. Goldman told Betabeat by phone. But 500 Startups opted for a different route here. 

“We didn’t want to do an accelerator in New York at this time,” he said, “We don’t really see a gap in the market.” If you classify accelerators as a three-t0-four month program with some equity or cash component, Mr. Goldman explained, “There’s actually more accelerators in New York than there are in the Bay Area.”  He estimated that there are six in Bay Area and eight or nine in New York.

Considering the expected shake out in the accelerator market, coworking seems like a safe choice. 500 Startups will charge $500 per desk per month with room 40 people. He estimated that the space will house four to five existing portfolio companies and another five or so outside startups.

The intent of the office is to bolster an offline community to go with its online platform called Dashboard.io. Paul Singh, one of 500 Startups cofounders, also happens to be a hacker and built the forum where 1,000 portfolio founders and 200 mentors communicate daily. Mr. Goldman described it as a cross between Quora and Facebook, with conversation threads and a place to ask questions outside one’s area of expertise. Mentors also use the scheduling function to book virtual office hours.

“The heart of our organization is really this community where they’re actively engaged in a daily basis,” said Mr. Goldman. “It’s pretty unique. I don’t really know of any VC fund that has the same dashboard function, as we call it. I know First Round Capital has more of a Wiki style, but there are no mentors that are part of that. It’s part of our value add.”

He hopes a physical space will augment that. “We just feel that New York is really a landing spot for folks, for example, from Toronto, Montreal, through Europe, from the Middle East and Israel. If they’re gonna open an office in the U.S., it’s most likely gonna be in New York,” he said. “We want to do more in those regions I mentioned,” he added. So as companies mature and want to set up operations or a salesforce in New York, they can pick up a desk or two. Same goes for the firm’s 200 mentors around the globe. “They’ll have a place to come and do their work and also hold office hours.”

Mr. Goldman, who moved to 500 Startups from Silicon Valley Bank last fall, said the VC firm functions more like a startup in terms of increasing head count in different geographies and establishing structure as you grow. “We’re moving quickly and doing a lot of new things and testing different ideas. I’ve never actually worked for a startup,” he said.

Why 500 Startups Decided to Launch an NYC Coworking Space and Not an Accelerator