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Ok, so I did some quick numbers on performance. It looks like the first batch was in 2005, meaning ycombinator has been at this for 10 years. Have they always f

Ok, so I did some quick numbers on performance. It looks like the first batch was in 2005, meaning ycombinator has been at this for 10 years. Have they always funded with 120k? Assuming that (and not present valuing the older money): Total Investment: ~$131,600,000 Total Companies Value: >$65,000,000,000 YCombinator's 7% Value: $4,550,000,000 Total Return: 3357% Annualized Return: 42.5% Obviously, it costs more than the initial investment, but these are really nice numbers if compared to a mutual fund, etc. Did I make any mistaken assumptions?

deleted 11y ago
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npkarnik 11y ago
You're not factoring dilution in at all, for one. Also, the 120k is more recent.
sthomps 11y ago
Need to take into account dilution in subsequent fundings. So much less than 7%. #s are still out of this world though
nostrademons 11y ago
The $120K is only since 2014: https://blog.ycombinator.com/the-new-deal https://blog.ycombinator.com/the-new-deal From 2012-2014, YC companies received an automatic $85K follow-on investment from a syndicate of investors, though this was not funded by YC. From 2011-2012, they received an automatic $150K from Yuri Milner. From 2005-2011, it was $6K/founder (I think very early on, it was a flat $20K). So YC's capital expended has been a lot less over time than the current deal would reflect.
jnevelson 11y ago
Need to take dilution into account here. If we assume a (optimistic?) 1% stake, that's $650M. YC recently (1-2 years ago?) started giving 120k. Before that, it was 10-20k. So let's say half of what you said is the total investment = 65M. That's a 10X return. I actually was expecting higher. Am I missing something in my numbers?
- vasilipupkin 11y ago
  that's probably roughly right. But why did you expect higher? they are generating somewhere around 20-30% IRR. That seems massive in the current low yield low return environment
  - 001sky 11y ago
    20-30% irr is not very high given the risk involved. a lower risk portfolio that is leveraged can give you this return quite easily (in a mechanical sense). in that case you have or take a low-risk low return investment and add risk and return by adding say 10x leverage to a 3% return. In this case, the more relevant number is $$ in and $$ out. and also the optionality to continue the business going forward. That is what seperates the two cases out, and arguably make the one quite distinct from the latter.
    - vasilipupkin 11y ago
      A leveraged portfolio is a bad comparison because you could also leverage this portfolio. Let's compare apples to apples. There is no unlevered investment right now that can give you such high returns, that I can think of.
      - 001sky 11y ago
        No, its not a bad comparison. Any decent investment vehicle is not putting money out the door unless they are clearing 20% in their base case returns. The point is you expressly RAROC the two portfolios. A retail investor is not going to look at any of this as relevant, so avoiding leverage is pointless. Anyone benchmarking this asset class has access to leverage (and in this market, at low yields).
        vasilipupkin 11y ago
        right. But since I can lever anything, leverage as a factor is irrelevant. I could also lever this portfolio and get 100%. The point is you need to compare apples to apples, not apples to oranges.

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npkarnik 11y ago

You're not factoring dilution in at all, for one. Also, the 120k is more recent.

sthomps 11y ago

Need to take into account dilution in subsequent fundings. So much less than 7%. #s are still out of this world though

nostrademons 11y ago

The $120K is only since 2014: https://blog.ycombinator.com/the-new-deal https://blog.ycombinator.com/the-new-deal From 2012-2014, YC companies received an automatic $85K follow-on investment from a syndicate of investors, though this was not funded by YC. From 2011-2012, they received an automatic $150K from Yuri Milner. From 2005-2011, it was $6K/founder (I think very early on, it was a flat $20K). So YC's capital expended has been a lot less over time than the current deal would reflect.

jnevelson 11y ago

Need to take dilution into account here. If we assume a (optimistic?) 1% stake, that's $650M. YC recently (1-2 years ago?) started giving 120k. Before that, it was 10-20k. So let's say half of what you said is the total investment = 65M. That's a 10X return. I actually was expecting higher. Am I missing something in my numbers?

vasilipupkin 11y ago
that's probably roughly right. But why did you expect higher? they are generating somewhere around 20-30% IRR. That seems massive in the current low yield low return environment
- 001sky 11y ago
  20-30% irr is not very high given the risk involved. a lower risk portfolio that is leveraged can give you this return quite easily (in a mechanical sense). in that case you have or take a low-risk low return investment and add risk and return by adding say 10x leverage to a 3% return. In this case, the more relevant number is $$ in and $$ out. and also the optionality to continue the business going forward. That is what seperates the two cases out, and arguably make the one quite distinct from the latter.
  - vasilipupkin 11y ago
    A leveraged portfolio is a bad comparison because you could also leverage this portfolio. Let's compare apples to apples. There is no unlevered investment right now that can give you such high returns, that I can think of.
    - 001sky 11y ago
      No, its not a bad comparison. Any decent investment vehicle is not putting money out the door unless they are clearing 20% in their base case returns. The point is you expressly RAROC the two portfolios. A retail investor is not going to look at any of this as relevant, so avoiding leverage is pointless. Anyone benchmarking this asset class has access to leverage (and in this market, at low yields).
      - vasilipupkin 11y ago
        right. But since I can lever anything, leverage as a factor is irrelevant. I could also lever this portfolio and get 100%. The point is you need to compare apples to apples, not apples to oranges.