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YC has just closed a new $8.25 million fund
- abstractbill 16y agoCongrats pg, jl, tlb and rtm! 70 startups per year is an amazing number - how long before YC is involved in practically every startup in Silicon Valley?
- pg 16y agoI couldn't resist calculating the answer to your rhetorical question. It depends how many startups get started each year in SV of course. If the answer is 1000 and we continue to expand at 1/3 per year, then 12 more years. But since we could never get all the startups, what this calculation really proves is that our growth rate is going to have to slow down at some point within the next 12 years. Unless of course there start to be a lot more startups, which is a real possibility. But it's alarming to think what sort of monstrosity we'd have to evolve into in order to fund 1000 startups a year. http://upload.wikimedia.org/wikipedia/commons/b/b7/B-24_Liberator_Consolidated-Vultee_Plant,_Forth_Worth_Texas.jpg http://upload.wikimedia.org/wikipedia/commons/b/b7/B-24_Libe... I doubt I'd want to run it.
- MaysonL 16y agoYou won't have to. Your alumni network will do it. A more interesting question: how long will it be before YC, or its alumni, are involved in a majority of SV startups?
- pg 16y agoHmm, interesting question, but so much harder to calculate, however bogusly. Paradoxically enough, the answer there would be the fewer, the better, because the spread of YC alumni to companies they didn't found tends to happen through startups dying or getting acquired in small, early acquisitions. Ideally all the startups we funded would go public and the founders would still be working for them 10 years later, like Larry & Sergey are. In that ideal scenario the number YC alumni were involved with would reduce to the number we funded.
- philwelch 16y agoWhat about the case where successful YC alums become angel investors in their own right?
- pg 16y agoThat already happens. The Reddits and Zenters have made angel investments in later YC funded companies. They make great investors. They're completely trustworthy, because they're all part of the network, and they understand the founders' situation better than any other investor could.
- johnrob 16y ago8.25 million / 20 K per startup = 412.5 startups!
- pg 16y agoSadly, you are forgetting our operating expenses. We calculate it will fund around 240.
- kapitti 16y agoThat's a pretty steep management fee.
- pg 16y agoAs a percentage, but not as an absolute number. YC is actually run very cheaply, but the amounts we invest are so small that any expenses seem high in comparison.
- zhyder 16y agoCan you share what these variable (i.e. per-startup) operating expenses are?
- breck 16y agoI don't know the details but from my observations they are: - Office space - Legal fees - Events (demo days, etc., are catered) - Salaries - Weekly food costs I actually thought the operating costs would be slightly higher. The office is a comfortable space and the food is great(IMO, others might disagree :) ), the events are always well done, you'd expect the legal fees to be high, not to mention how much time everyone at YC puts in.
- zhyder 16y agoAre those all per startup? I assume office space, legal fees and salaries refer to YC and not its startups (e.g. YC's legal fees, not the startups' legal fees). Food would be per startup of course.
- sadiq 16y agoI'm wondering, will YC's current setup scale with the increase in numbers? As in, will new YC companies have less time with staff, etc..? How do you plan to cope with this?
- pg 16y agoI think the reason people are surprised that we fund so many startups compared to other YC-like organizations is that I work full time on this, whereas at nearly all (perhaps all) the others, the startups are advised by a consortium of people doing it part time. When you're doing it full time, it's no problem to advise, say, 25 new startups at once. At least once you have some practice. Earlier this year we hired Harj Taggar who also works full time advising startups. Since this kind of work scales nearly linearly, we're about as busy as one person would be advising 18, which was no problem at all.
- netcan 16y agoAny idea what you would need to do differently to fund, say, 250?
- pg 16y agoThat is a type of question we think about a lot. But we know that our guesses are likely to be pretty bogus. We approach scaling YC the way you would approach scaling software. And the way scaling works is that you can never be sure what the bottlenecks are, or how you're going to get around them, till you hit them. So it's interesting to speculate about, but not useful except in a mind-opening way.
- deleted 16y ago[deleted]
- staunch 16y agoI'm hoping we'll eventually see some experimentation with the model, now that they have more money to work with. I've always believed there's room for a YC-like company to do slightly bigger investments. Instead of $17k for 2 founders, it would be $80k for 2 founders. That way they could attract people with higher cost of living/high paying jobs (who would hopefully tend to be more successful due to more experience/connections/stability)
- spoiledtechie 16y agoIts a big reason why I can't do it. I have bills that must be paid. Student loans and they are larger than most everyone I come across.
- bkrausz 16y agoWhat are your monthly payments? I imagine anything under $500/month is doable (I have $250/month and just quit my job: by the time I run out of money I'll know whether or not my business will work out, and that's really all you need). EDIT: as a corollary, I'm thrilled I didn't pay off my student loans earlier. They average about 4.5% - that's the cheapest loan you can get anywhere. Treat it like a business loan and use whatever you save to live off of when you're working on your startup :).
- webwright 16y agoHow much income would you need? Even with a smallish Series A, you're generally expected to have a pretty crappy salary. It's kind of sad that startups are a game for people who have a long personal runway (combination of savings and cheap lifestyle, usually), but that's the reality. No investor is going to be excited to see their money put to work by paying down student loan bills, though at a certain level you can often swing a 50-70k salary. As I understand it, get big revenue or a big Series B round, and you can generally lobby successfully for a non-insulting salary.
- aditya 16y agoInvestors will question your judgement if you pay yourself more than 50-70k? That's surprising.
- bkrausz 16y agoThat should keep YC going practically indefinitely :). Assuming the data at http://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l1Vnl5NmZjaTBNQWlJYVozMEE&hl=en http://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l1... is complete. And assuming a $17k investment for 6% from all the companies who have exited (I know, big assumptions): 207 investments @ $17k is $3.5m 13 exits @ $69m total is $4.1m for YC That means that YC is probably close to breaking even already, plus they have all their equity in a ton of successful companies that haven't exited yet. I don't know much about investing, but at this rate $8.25m should keep them going for quite some time.
- deleted 16y ago[deleted]
- joshu 16y agoFunds don't generally work that way. They return the investment to the investors. When the money is done they raise a new fund. (This isn't absolute. There are evergreen funds that have the returns go back into the fund.)
- jedc 16y agoI'm the guy who maintains that spreadsheet, and do try to keep it up to date. But my huge disclaimer is that the exits are _my_ guesses only, and are likely wildly off the mark. But I keep it since I think my errors potentially cancel themselves out in aggregate, and it's useful to estimate the financial return YC has had thus far.
- henning 16y agoThe way I see it, there's no way to show confidence in the future like putting your own money up. This is great even for people not affiliated with YC, its partners, or YC-funded startups.
- jazzychad 16y agoPosterous's removal of decimal points from titles makes for an interesting permalink :)
- pg 16y agoI noticed that when I sent the link to the YC partners. It was interesting how horrifying it seemed.
- tansey 16y agoComing from the hedge fund world, $8.25M seems so small. It's amazing how much it can fund. What are the requirements for becoming part of the next YC round? Do you have to know someone already involved with YC? Does YC only accept investors who are successful tech entrepreneurs? What about people who have the money through other means and are tech savvy? Can investors send a proxy who is qualified at helping out?
- pg 16y agoBasically, we just ask our friends, who mostly turn out to be hackers.
- paraschopra 16y agoYou can definitely fund more startups but as you admit yourself, the startups you fund don't give up equity for money. They give up equity for your guidance, network and the whole ethos of the program. Scaling up the YC experience would be an interesting challenge.
- deleted 16y ago[deleted]
- rewind 16y agoPerfect timing -- I was just finishing my 93-page business plan and the last line of my nine pages of Excel spreadsheets told me I needed $8.25 million. I'm definitely applying for the next round.
- andrewhyde 16y agoCongratulations! Can't wait to see the new classes and what they do to evolve the web.
- jagjit 16y agoIt is very heartening to know that many YC winter 2010 startups are already profitable. Is more information available on profitable YC companies so far? And how they got to cash flow positive.
- gcv 16y agoThe previous YC funding cycle, winter 2010, had 27 startups. Already 20 of them (74%) are either profitable or have commitments for further funding. That's amazing. Congratulations.
- daniel-cussen 16y agoIs it possible to defer YC?
- OoTheNigerian 16y agopg, is there any possibility of expanding YC outside the US?