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Ask HN: Is the Y Combinator model dead thanks to Kickstarter-like crowd funding?
As of a few moments ago, the Diaspora project passed $50,000 — five times what they'd asked for, and it seems that people are still giving... there's 20 days left for them to keep doing so!<p>It's been exciting to see them double their "investment" in less than 24 hours and proves that it is <i>possible</i> to crowdfund startups.<p>So my question is whether such successes totally invalidate the Y Combinator model?<p>And, on a related vein, what sort of support infrastructure would people like to see with the crowd funding + social media approach?<p>Thanks!
- joubert 16y agoWave of democratization. Too early to tell.
- icey 16y agoNo. YCombinator's value isn't the money, it's the vast network of connections and deep experience they can provide.
- _delirium 16y agoWhile true, a different interesting question might be: will crowdsourced funding make angel investors who aren't YCombinator less in demand? I don't think every angel investor has the same reputation/connections YC has, and some really do bring mainly money to the table.
- icey 16y agoI would assume it would impact those investors. Investors without connections are sometimes more of a pain in the ass than not having money at all.
- samdk 16y agoI think you're missing a huge benefit to having investors, which is that you're able to consult with them and get advice, and they have a very real motivation to give you good advice and to help you if they can. YC also has the benefit of a large (and pretty successful) alumni network, and a lot of the YC people I've seen talking/writing about their YC experiences have listed that as a huge positive. edit: Nothing's stopping you from applying to YC too, but the original question was whether or not this invalidates the YC model, and this is why it doesn't.
- doron 16y agoWell they are actually getting investors at the moment, and they might get sage advice by people who are willing to do so on the net.
- jurjenh 16y agoI suspect the valuable advice might well be buried in the noise, and take more time to sort out than you would get if you were just dealing with a couple of big investors. That, and bigger investors have more at stake, so it is in their own interest to see you do things right quickly.
- jacquesm 16y agoWhat stops them from applying to a VC or a seed stage investor like YC?
- ig1 16y agoThe value of Y Combinator isn't the money.
- jacquesm 16y agoYes and no. Others have already said 3 times now that the value of YC is not in the money, and I agree with that for the most part. But what Kickstarter does is it allows you to 'divorce' the advisory/networking roles and the funding roles. There are plenty of people that can mentor but they may not be in a position to fund for a variety of reasons (for instance not being an 'accredited investor'). Like this you could actually hire them to give their advice, rather then to come to them for both money and advice, as well as a network. So kickstarter may very well spell the end of the incubator, but via a completely different route. Companies like YC thrive on the scarcity of the combination of people with the money to invest and the time to mentor. If Diaspora fails the model will likely collapse though, they're a poster child for this model now, they had better succeed or die (figuratively speaking of course) trying. No going back for them. edit: and don't underestimate the power of being 'YC funded' for follow up rounds.
- rantfoil 16y agoKickstarter is a great thing to push people to get things done that they might not otherwise do on their own. YC is a great way to kick your startup into high gear as well. But that's where the similarities end. They are not substitutes for one another. YC is also not a company. It is a pre-seed stage venture firm (with amazing advice from PG, Jessica and co) and a network of entrepreneurs who help each other.
- jacquesm 16y agoI don't even think that it is inconceivable that a group funded through kickstarter knocks on YCs door for guidance in return for 5% + some more dough. The chances of success have already improved because of kickstarter, so kickstarter could be a pre-pre-seed stage idea validator, to see if something has legs or not before you even apply to YC.
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- _delirium 16y agoI'm not sure Kickstarter is that tied to Diaspora. Depending on which community's blogs / trade press you read, there's a lot of interest in it from people who've never heard of Diaspora. Lots of people in the game industry are watching various indie-game-funding Kickstarter experiments, for example, and whether any of them pan out will be the main thing that'll determine whether people from that industry will take it seriously in the future.
- percept 16y agoIn this case people are voting with their dollars. Most startups won't have the benefit of a controversy generating a wave of press behind their cause. Are there already sites that take pledges for software projects (successfully; I think there have been failed attempts)?
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- brc 16y agoOne seems to be a way of throwing some loose change at an idea you think might be neat. The other is a carefully developed way of identifying and assisting projects that have a good chance of developing into profitable businesses. Losing sight of the fact that someone has to actually make money from these things at some point is precisely what gives you internet bubbles. From everything I've read about YC it's all about focusing down to build something that someone wants to buy. That's a world away from accepting donations from people who think something cool might come of it.
- mikeleeorg 16y agoAside from the personal consultations, experience, expertise, and connections that YC offers over Kickstarter (which are all vastly important), I suspect it is much more difficult to raise funding through crowd funding than through angels & VCs, relatively speaking. There's also the question of whether or not they'll know how to most effectively use that funding. Consultation from experienced people like those at YC would help there too. Diaspora is an edge case. All the press they've gotten have catapulted their popularity enough to raise this amount. And more power to them too; they have a valiant goal and I hope they can execute on it well. But I wouldn't try to raise funding for a for-profit startup through crowd funding, unless perhaps your startup has an apparent, believable, and widely-desired benefit to society. I'd love to be proven wrong, but this argument only has a sample size of 1 so far.
- jerermy 16y agoSeems like a very relevant debate. Indiegogo and Kickstarter seem to be paving the way for micro investing.
- fookyong 16y agoit's not really "investing" though, is it. it's giving people money. there is no exchange of equity involved in the kickstarter transaction (nor is it allowed, according to their TOS, I think).
- stuntmouse 16y agoOne obvious disadvantage: with Kickstarter, you're ploppping your business plan on the net at a very early stage. Makes it quite easy to poach.
- deleted 16y ago[deleted]