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Ask HN: Why have none of the ~940 YC companies ever gone public via IPO?
It was interesting to notice in the discussion of the announcement of the VC fund that no YC company has ever gone public via an IPO.
After 10 years of success, and a lot of VC-backed companies that would be looking for eventual exits, that seemed like a surprising statistic.
Is the market for private funding that attractive, or the public market process that unattractive, or is it something special about the YC ecosystem that tends to not culminate in an IPO, or just the luck of the draw?
- Diamons 11y agoYou're not going to get an answer. I think we all know why.
- sixQuarks 11y agoWhy?
- Diamons 11y agohttp://i.imgur.com/iv5NLKe.jpg http://i.imgur.com/iv5NLKe.jpg
- aerovistae 11y agoNot clear if you think you're being clever but you're just coming across as annoying
- Diamons 11y agoYou're struggling with some strong cognitive dissonance there. It is well known we are in a bubble. Everyone but Silicon Valley knows it.
- crpatino 11y agoI agree we are running in bubble-like dynamics now. Personally I believe this is driven not by dumb money but more by the fact that the rest of the economy has been under-performing since '08, and therefore smart money is looking for any investment that improves odds at big results. I honestly don't know if this distinction will matter at the end or not. On the other hand, you could have spared a lot of down votes if you had made your point clearly in the first place.
- deleted 11y ago[deleted]
- sixQuarks 11y agoThat doesn't even make sense. If it's because we're in a bubble, why would that stop companies from going public? It would actually help them go public.
- aerovistae 11y ago"We all" = ....? I certainly don't, and would enjoy insight.
- sixQuarks 11y agoMarc Andreessen answered this question: The IPO is Dying http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-andreessen-explains-why http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-a... Basically, high-tech growth gains have been privatized. Most of the upside is made via venture capital now.
- jbob2000 11y agoHe made a couple of really important points in that interview though; that the stock market is now dominated by short-sellers, who in their lust for short term gains, will start rumors about your company and due to regulations, you can only respond in certain ways. that, in his words, you need "fleets of lawyers and accountants" to meet all the regulations, something only a billion dollar plus company can afford. that your company's stock will get "batted around like a chew toy", which will really mess with a smaller company. It sounds like the stock market is a buyer's game these days.
- segmondy 11y agobah, you could always beat those short-sellers by being profitable and generating revenue.
- tptacek 11y agoThe premise of this question is that each year YC operated produced identical returns. No. * The alumni network has gotten steadily more valuable * The signaling value of being accepted into YC has increased dramatically * YC's direct influence on investors has increased steadily * The incentives to apply to YC have increased accordingly, setting up a virtuous cycle (you had to be a bit of an oddball to be in that first class) * Each batch now funds many more companies than YC did in its entire first year Meanwhile: it takes lots of years to get to a point where you're ready to file S-1; since the nuclear winter in 2001, you need to be doing a huge amount of revenue with a profitability that can be modeled in simple Excel spreadsheets to do it. So if you figure YC hit its stride 5 years ago, the year Stripe applied, they're right on schedule. Consider: Square was founded in 2009, with gold-plated credentials, has done very well, and is only now filing for IPO.
- danw3 11y agoCan you elaborate on Square's gold-plated credentials? Most of the news / comments I've read about square post their IPO disclosure have been negative (or at least skeptical) - largely to do with the increasing loss rate and the state of the payments market.
- 7Figures2Commas 11y agoSquare has prominent co-founders and raised over half a billion dollars from prominent investors. One way to look at Square is as a company that essentially bought its way into the payments space. The question is whether its premium valuation is warranted. Some analysts point out reasons to be skeptical[1]. [1] http://www.streetinsider.com/Analyst+Comments/Cowens+Damning+Analysis+of+Squares+IPO/10977891.html http://www.streetinsider.com/Analyst+Comments/Cowens+Damning...
- ksherlock 11y agoFamous founder with previous start up success, lots of VC capital, lots of press, lots of growth, lots of hype. Maybe they even have an open office with foosball and Aeron chars (or are standing desks the new status symbol?) As a start up, they're crushing it. As an actual company, you know, the kind where revenue > expenses, they utterly fail it.
- BraveNewCurency 11y agoHow could it not be luck of the draw? Do you understand how rare IPOs are? > Why have none of the ~940 YC companies ever gone public via IPO? I take issue with your implication: "YC has had no IPOs after funding ~1000 companies". That is a premature call, and (frankly) bending the truth. YC has been taking on more startups per year recently. That skews the age of YC companies to very young. If you assume that an IPO takes > 5-6 years, then results for the vast majority of YC companies aren't even in yet. > After 10 years of success, and a lot of VC-backed companies that would be looking for eventual exits, that seemed like a surprising statistic. Sure, YC may have fewer IPOs than normal VCs. That's because they are an early-stage investor, which has much higher risk. Thus, you would expect fewer IPOs compared to a late-stage investor. > is it something special about the YC ecosystem that tends to not culminate in an IPO, Citation needed. What is the "expected" number of IPOs? Are there similar early-stage VCs that have more IPOs? It sounds like you are trying to dig for a problem that doesn't exist. It's like complaining that your favorite baseball team hasn't had enough no-hitters. Who cares, as long as they are winning!
- RockyMcNuts 11y agoDidn't mean to imply a problem, or a criticism, or anything, really. My prior would be that the public market has really changed in significance for tech. the ~900 is the wrong base rate, takes 7-10 years to become IPO eligible, but there were ~100 companies through '08. 0 IPOs after 10 years still seems like a bit of an outlier for a large, unusually successful seed investor.
- brudgers 11y agoLine by line refutation usually indicates argument for argument's sake. It is not uncommon for people to go in search of things to take issue with.
- ChuckMcM 11y agoI think there is a simple fallacy in your question, you wrote: > After 10 years of success, and a lot of VC-backed > companies that would be looking for eventual exits, > that seemed like a surprising statistic. "IPO" is perhaps the smallest member of the set "eventual exits". Take the set of all companies funded by VC money since 2005, take the number of IPOs by VC funded companies since 2005, and you will get a very small number. (If the folks at MatterMark want to pop in here, they have this probability in their dataset).
- tomcam 11y agoSarbanes-Oxley. It's been a disaster for IPOs. http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-andreessen-explains-why http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-a...