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Introducing YC Series A Batches
- wasd 8y ago1. Will there be any additional investment in the A outside of YC Continuity? 2. How much do you think YC companies will raise post YC vs YC Series A?
- akharris 8y agoFrom YC? No. Not sure what you mean by the second question. Are you asking about the size of seed rounds vs. A rounds?
- wasd 8y agoSorry for the confusion. Yes, I was asking how much you think companies who graduate form YC should raise (say seed) compared to companies who are graduating from YC Series A.
- akharris 8y agoThat's heavily dependent on the company. There's a wide range that varies because of stage, market, required milestones, team, etc. Overall, though, the companies coming out of the A program will raise significantly more than they did at seed.
- akharris 8y agoWe think this is going to be an interesting new way for companies to raise their A rounds. Here to answer any questions people have about it.
- tosh 8y agoHow does it differ in focus from early stage YC batches?
- repsilat 8y agoFrom TFA, it looks exclusively focussed on fundraising and not at all on starting/growing a business, developing product, dealing with users etc.
- tosh 8y agoHow has the series A stage changed over the last few years?
- tosh 8y agoHow does YC think about signaling issues (in general and specific to YC)?
- akharris 8y agoImportant question. We think signaling is a tricky subject, especially with the number of VCs investing in As. There's a lot to unpack there, which I'll write about in the future. For YC - we're thinking actively how to prevent any signaling. That's why we invest pro-rata in all of our companies in the same way.
- misterbowfinger 8y agoWhat are "signaling issues"? Signaling that you're seeking a series A, or that you're seeking a series A from YC?
- wasd 8y agoI believe the signaling issues are companies which are admitted to YC Series A and those that are not.
- fredophile 8y agoYC typically invests at the seed stage. If YC makes, or doesn't make, a large follow up investment for some companies in series A it sends a signal to other investors about what YC thinks about the company. Since YC has access to information about the company's financials from already being an investor this kind of thing can influence other investors to make, or avoid making, an investment.
- wasd 8y agoI don't believe this is an issue. YC's stance is to always participate in their pro rata. "We exercise YC’s pro rata investing rights in all follow-on priced financing rounds, beginning with a company’s first priced round. At post-money valuations equal to or below $300M, we exercise our rights in all companies where we have a formal pro rata right." From: https://www.ycombinator.com/continuity/ https://www.ycombinator.com/continuity/
- simonebrunozzi 8y agoObvious thing to say is: is this limited to YC companies, or can external companies apply too? And if so, what's the "cost" (equity / etc)? Thanks.
- d0m 8y agoI think that's exciting because raising an A is really stressful and time consuming, and often as a startup you need to pivot and do short-term non-optimal things to be able to raise it. If that same "non-bullshit" that YC is using for seed-stage is used for the A, I'm sure it'll improve startups in the long-term.
- akharris 8y agoOur hope is that we can limit as much of the BS as possible while helping companies and investors focus on the parts that matter. Doing that should increase the rate at which YC cos get quality As done.
- k__ 8y ago"as a startup you need to pivot and do short-term non-optimal things to be able to raise it" Could you elaborate?
- lbotos 8y agoI assume GP is talking about dedicating time effort and energy to round up the money vs. spending that time effort and energy building the product. At $small_startup_where_i_was_employee_3, when we were raising, it was the CEO's full time focus, and cost a fair bit of money to generate the meetings, be in the right cities, etc, etc. He was also responsible for a lot of our marketing efforts (4 person co) so that took a toll, and shuffled onto others shoulders where it wasn't our strength.
- d0m 8y agoYes, but also even the product/company vision sometimes need to slightly change in the short-term to get those critical metric numbers to line-up with VCs' expectation. I.e. getting a few important contracts to prove product-market fit even if it's very costly for a small startup whereas it would have been wiser to wait a bit, focus on the product and scale the team before tackling these contracts.
- 8y ago
- ttul 8y agoDumb question: do you have to be a YC-backed company to participate?
- akharris 8y agoNot dumb at all. It's something we thought about a lot. The program is just for YC companies, though we'll continue to release information and learnings for other people.
- alfredallan1 8y agoWhy? If someone has “seeded” from personal funds/friends/family and gotten to a stage of reasonable traction, why disqualify them from direct entry into Series A, or artificially force them into Seed even when they’re clearly past that stage?
- vecter 8y agoEasier to start with a focused group of people you have some relationship with.
- lemiant 8y agoBecause the Series A program is free (no equity) and YC, although very founder friendly, isn’t a charity.
- alfredallan1 8y agoNo charity expected, being very founder friendly is sufficient. I must have missed this bit - “Series A program is free”. In any case, what I wanted to say is an independent Series A program (that allows direct entry in addition to Seed Program graduates), parallel (and similar) to the seed program, sounds like a good idea. Maybe that’s what this experiment might morph into eventually.
- bfaviero 8y agoAny chance you guys would open it up to YC alums with a new company? :)
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- tamalsaha001 8y agoHow does it compare to atrium.co? Are both of these for the same type of companies?
- angelguy 8y agoAaron, thanks for answering these questions. What is the YC Series A program's advice to founders around giving round allocation to prior investors? Is there an official stance on who should be let in? I've found with popular YC seed rounds that the founders turn to their YC partners to ask who should get in. Extending this to A's is a bit scary from a concentration of power standpoint.