Interview: Bedy Yang — 500 Startups

We chat with the managing partner of 500 Startups, on what she looks for in up-and-coming business founders

500 Startups is a venture-capital company that has backed over 2,500 startups from over 75 countries. The San Francisco, California–based firm provides early-stage financing and accelerator programs that provide budding entrepreneurs with advice, education, networking, and support.

Its managing partner is Bedy Yang, who heads 500 Startups’ ecosystem-development programs and has invested in startups in Kenya. Before her current post, she was a management consultant and a social entrepreneur in Brazil, and she’s a frequent speaker at conferences. We caught up with her to find out what she looks for in founders and their budding businesses before she and 500 Startups take them aboard.

What do you do as managing partner at 500 Startups?

I joined early on in 2011 to invest in founders from around the world. I’m Chinese-Brazilian, so I was more of an accidental investor. I think here in the Bay Area, investors normally have a certain profile. But luckily, 500 was looking at going beyond Silicon Valley and really taking the knowledge, the platform to different parts of the world. And I happened to know both particular Latin American and some Asian markets quite well. So it was fitting for me to come in and help many of our international investments.

In the early days, some of the investments were actually done in Africa. I brought some of the very first deals that came in under the global investment mandate that we have. The past few years I have been really focused — in addition to the investments that we’ve done in the past — on ensuring how do we really look at everything that we’ve been doing and take what’s been so vibrant in the Silicon Valley ecosystem and unlock and take it to different parts of the world and make that very accessible.

Today, I run what we call the Ecosystem Teams, where we spend quite some time thinking about how do we take capital to different parts of the world, how do we take the global mentors network, the knowledge, and how do we enable access to markets.

Any founder, any entrepreneur that, for instance, might be starting in Kenya, if they want to go next to Brazil or they want to go next to Indonesia or they want to go next to Saudi Arabia, hopefully we’re providing a very easy global expansion through capital, through the market, and through the knowledge which we believe is also part of that.

What do you look for in nascent companies before investing in them and taking them under your wing?

When we’re evaluating whether we’re going to invest or not in a startup, what we’re ultimately trying to figure out is can this team create a product with a very great fit. So we’re finding what a lot of investors talk about — product–market fit — but ultimately, in the super early stage, it comes down to the founding team: whether we believe that, with all those visions, they can create the execution into those markets.

And then the beauty of 500 Startups’ investment thesis is that we can also be quite risky in the markets we operate in. A lot of mandates would say, “Oh, you have to be in the U.S.” With 500’s investment thesis, we can be wrong 90-plus percent of the time, but when something is working really successfully, it also creates massive returns for us. So that allows us to have this risk and open mindset to be doing investments.

When we’re running our ecosystem programs, there’s no sort of investment required. So ultimately it’s this open platform for founders to get ideas started, get their ideas formed, and then, because we’re not doing investment at that time, we’re even more open to go even earlier stages and really open everything we’re doing for the founders.

What got you interested in this line of work in the first place? What were the consequential moments in your career trajectory that brought you to where you are today?

When I graduated from university in Brazil, there wasn’t a lot of discussion about starting your own business, and there wasn’t even the industry of venture capital where I lived. So it’s really hard to imagine — for someone who has never seen something like that, that no one talks about — to want to be doing that.

I think sometimes we seek that very specific angle or very specific career progression. When I started, I thought I wanted to be a CEO of a multinational. Today I would die if I took that job! It’s absolutely not what I want to do. So I think the pivotal moment was to start searching for what was most essential to myself.

A little bit of every single thing I’ve done in my entire career has been related to access. The first time I ever touched Silicon Valley, I was invited to an event with a lot of key people, and all of a sudden I said, “If I don’t have all the background and I don’t have all the ideas to execute yet, but I can access this, what if I create a network and I allow that network to really benefit from this?”

So over the years I’ve really homed in on what mattered the most. A lot of it is opening the bridge, opening the translation among different groups, so that we can create a lot more opportunities.

Before 500, I built out this network called Innovators; it’s a Brazilian network with 10,000 people. I was thinking if I had access to something, what if 10,000 people, what if 100,000 people, what if a million people had the same access? Imagine the number of solutions and opportunities that can happen.

I don’t believe everyone needs to go into entrepreneurship; I don’t think everyone needs to go into venture capital. But if I can open the access to people, they can choose whether they want to go into that.

Everyone has a different path to success in business and entrepreneurship, but are there any ingredients that are necessary for any individual who wants to find success and bring their idea to a large scale?

I think there are a few components there. I think the first ingredient is what’s your drive and passion and commitment. Everyone is different and there’s not a right answer, but I think, especially as you start your career, you can think, “What are the moments that make you happiest or most fulfilled and how do you replicate more of that?”

And what do you say “no” to? Like, my mom wanted me to become a doctor, a lawyer, and that didn’t make me happy at all, and I said “no” to a lot of things. So I think the first thing is to stay true to the commitment and passion of who you truly are.

Another thing that has worked really well for me — and I see that for a lot of entrepreneurs as well — is building out a learning mindset because the world is changing things so rapidly.

I think the third one is surrounding yourself with outstanding people. Very often, I look around and say, “Are these people pushing me to be better?” I love being around people who believe everything is possible.

In the early days when I thought about building Brazil Innovators, I remember some people came to me and said, “You are not integrated into Silicon Valley. You are no one. Why would you be able to build that?” And then there were some people who said, “Great. How can I help you? I can see these three things that you can do. Let me know how I can be supportive of whatever you’re building.” So naturally I started selecting people around me where I wanted to take their vision.

I feel like now the world is evermore open, especially now with even more digitalization. The access to the people you want to spend time with is extremely important.

500 Startups has backed several companies in Kenya. Are there any unique challenges or opportunities in Kenya or East Africa that are especially applicable to up-and-coming entrepreneurs there?

I think it’s just really impressive that, with very little infrastructure and incentive for entrepreneurship, you can see a lot of successful cases even without trying to architect the entrepreneurial components.

One of the first things we’ve done was to invest in a fund called Savannah Fund: It’s a Tanzania fund that operates pretty actively also in Kenya. We believe that, by empowering a network, that network of funds or people can broaden more. So I think a few things for us to catalyze is: Can we bring founders, for instance from Kenya, to our current programs, or can we find funds or networks that can broaden up our potential participation and work there? Savannah Fund is one of them which we think broadens the network.

One of the big challenges when founders are starting is access to capital, access to talent, access to markets. There’s this [Kenyan] company that is right now in our accelerator batch — the flagship one we run in San Francisco — called Pariti. They help businesses in underserved markets to overcome a lot of these hurdles of capital and talent and going beyond their borders.

We got super excited about this startup because it really addresses the challenges. When you have big challenges, there are also big opportunities for the founders to solve. When everything gets sort of perfect, the solutions you’re building aren’t that interesting.

Any parting advice or thoughts that you might have for young, prospective entrepreneurs in Kenya?

When we started investing, we started investing in very, very early stages in different parts of the world. We’ve seen really amazing growth, companies being created.

It started in Southeast Asia. Then we saw that same trend in Latin America and most recently in the Middle East and North Africa region, where we’re seeing a lot more funding, a lot more entrepreneurs building really exciting businesses. And then internally at 500, we know Africa is going to be one of the next important, emerging markets for us to double-down on all the things we’ve been doing. I know we’re only touching the surface.

I encourage founders to look at a lot of the global resources that are available — not only 500. There’s so much content and resources available. And I think the world also wants to see young entrepreneurs from Kenya be very successful.

Never be afraid to be bold and reach out and ask questions. It’s really important for founders to then build a very important team foundation. And then, as they’re successful, it builds the next generation as well.

It’s encouragement for people who are very, very interested in entrepreneurship: Don’t be afraid, get started, and most importantly, don’t be afraid to reach out.