Y Combinator doesn't charge you anything, but gives less cash for roughly the same equity. I don't know about Tech Stars. I think Founder Institute charges and doesn't invest, but I don't know their terms, and they're not really an accelerator.
It's normal for VCs in Series A to bill you for their legal expenses. Maybe that's a similar kind of thing to giving money and then charging back for expenses. It's obvious that accelerators have per-participant expenses; it's up to them and their LPs whether they should cover it by recouping from portfolio vs. overhead.
I don't think this term would influence my decision to participate or not. If an accelerator isn't a clear yes (massively increasingly your odds of success, raising your investment valuation, etc., far beyond what it costs), it's a no.
For Y Combinator, I'd say it's a clear yes. For a lot of the other accelerators, it's a no. I've heard good things about 500 Startups from other people I know who have participated.
As the FAQ says, they charge for office space, food, resources, guest speakers, etc.
To a certain extent it helps companies understand the value of their cash. Rent and benefits are costs that (almost) all businesses bear. $50,000 is a lot of money and some founders burn through it too quickly. Mentally, it's a lot different than YC's $15,000.
They provide a prime office location (top floor of the tallest building in downtown Mountain View) and regular catered meals (several meals a week) as part of the multi-month accelerator program.
When we took part in the accelerator, we were initially surprised by this charge, but found it to be a minimal charge relative to all that 500S provides.
If 500 Startups funds a company ($50,000) to join the accelerator, it will charge fees to help cover the costs of running the accelerator office space.
It keeps the company in check. It reminds the company that expenses come with the business. It forces founders to be mindful of what they're getting. It makes everyone realize that they're being invested in as much as they're investing too.
I don't care if psychologically $35k sounds better than $50k minus expenses to you. It makes for better founders and better companies. You should think about it from this perspective.
There's something about 500.co and it's members which makes me think of them as a totally different cult, very closed group of people, arrogant and somehow not a very good feeling about them. It must be just me.
I saw a live stream of 500s presentations. There was a guy who couldn't stop swearing. I have nothing against swearing if there's good reason for it (eg. someone's really truly upset and needs to communicate how upset they are), but for a pitch to outsiders? It really bugged me. I guess for similar reasons, I love HN because it is really civil compared to other forums on the web; many other places (excluding quora), the trolls seem to run wild.
I don't want to think all 500s participants are like that, but it rubbed me the wrong way. It seemed childish, like, "I'm cool because I can swear, check me out!" I don't think I should let it colour the way I think about all 500s participants, but for some reason, it's a permanent link in my mind whenever 500s is brought up.
They seem like they're actually a pretty good outfit, but Dave McClure is known for communications chock full of explitives. I don't have problems with those words - they're pretty effective when used in the right way - but they kind of lose their meaning when used in those quantities.
Seems like sort of a minor detail though if they do a good job otherwise.
I like all the people in 500S, both the organizers as well as the participants. But I associate the brand with "unintelligent". It's like for the people who didn't quite make it or something.
As other commenters have pointed out, 500 is way more international than YC. Over half of the companies in the current batch (of which I am one) are international. Dave McClure, Paul Singh, etc spend HUGE amounts of time travelling the world looking for the best trends and startups. In that sense, they select from a much wider field of applicants.
500 itself has no problem giving money to international companies - however, most companies flip-up or establish in the US to make it easier for other investors. It does depend on the company though. Some companies come to the US to enhance their network, not necessarily to crack into the US market, so setting up shop here legally doesn't make sense.
For visas - they provide references, etc that are needed and are very quick and responsive about it. That said, they will not "sponsor" you to come in on an H1-B or anything like that.
There have been many international companies that have gone through the accelerator program, including ones from Asia (Hong Kong, Taiwan, Japan, India), South America (several from Brazil) and Europe (Croatia, Estonia, etc).
It's a great way for international companies to quickly get integrated into Silicon Valley.
Do most accelerators charge you to participate in them, while at the same time investing ~$50,000 for 5% equity?