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Isn't it risky to selectively back particular YC companies? There's always a negative signal when your lead investor doesn't participate in future rounds - if t
by probe 9y ago
Isn't it risky to selectively back particular YC companies? There's always a negative signal when your lead investor doesn't participate in future rounds - if they start doing that more regularly with this new fund, then it might become a negative signal for a YC company NOT to have Continuity/YC as a follow-on investor (which sucks b/c the firms are so early stage).
Anyone know how VC firms that invest in all early-growth-late firms deal with this dilemma (realizing there are only a few cases)?
- dzink 9y ago"to selectively back companies that didn't participate in its accelerator program"
- WisNorCan 9y ago"So far it's only done one such deal, which remains unannounced, but more could come." How does Axios know that they have done a deal if it hasn't been announced?
- joncalhoun 9y agoMy best guess - someone told them of such a deal, but wouldn't disclose who the company was because it hasn't been officially announced.
- _sentient 9y agoYC has explicitly stated they won't lead Seed or Series A rounds in order to avoid this conflict. They are intentionally leaving economics on the table in order to better support their founders. At the stage Continuity invests ($15-$50M rounds), YC's early signal is far less important than the actual fundamentals of the business.
- ivankirigin 9y agoIt's even better than that too, given their commitment to invest pro-rata. So the money is there if you can get another firm to lead. Because this policy is public, there shouldn't be signalling issues.