Energy is still high within accelerators like 500 Startups and Y Combinator.

By Michal Lev-Ram
August 3, 2016

Recent numbers show it is becoming tougher for startups to raise money. Someone forgot to send that memo to Silicon Valley accelerators like 500 Startups and Y Combinator.

I spent Tuesday attending standing-room-only events at both seed-stage startup accelerators, and while the current downturn in funding and valuations was brought up, the energetic mood was clearly not impacted. Dave McClure, founding partner of 500 Startups, kicked off his fund’s 17th “Demo Day” donning a sparkly, rainbow-colored wig and unicorn horn. (Yes, unicorns are starting to live up to their name again by becoming scarcer.) “There are still a lot of people deploying capital,” he said enthusiastically to the crowd of investors and startup entrepreneurs, all gathered near the Googleplex at the Computer History Museum.

There are also still a lot of startups trying to innovate—albeit on a tighter budget than in previous years. At the 500 Startups event, a company called Boomerang, which says it is trying to “make email great again,” proclaimed it has grown to 45 million “active installs” on just $400,000 in capital. Later in the day, at Y Combinator’s weekly Tuesday night dinner, about a couple hundred entrepreneurs gathered to network and hear an inspiring talk from Pixar co-founder Ed Catmull. I met one such entrepreneur who started a company, called Nova Credit, that pulls international data to give immigrants access to credit. Pretty cool idea.

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To be sure, most of the startups I met will fail—and not just because they won’t be able to raise enough money. That’s always the case in Silicon Valley. Still, it was encouraging to see the energy in both rooms. One note to self (and to readers) though—if you’re expecting to eat at an accelerator event, get to the food line pronto. Food, if not financing, tends to dry up fast in a startup crowd.

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