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It surprised me to see Sam Altman on this list. Where does that money come from? Maybe Loopt is very profitable and he takes a big salary? Or maybe he had cash

It surprised me to see Sam Altman on this list. Where does that money come from? Maybe Loopt is very profitable and he takes a big salary? Or maybe he had cash before Loopt?

timcederman 16y ago
I have seen a few YC folks, currently running their own successful company (Loopt is one example, HeyZap is another) investing in new YC companies. I'm also interested in the rationale.
leelin 16y ago
Most angel investors need to decide whether to put up the money based on a few one-hour pitches and what they read in the press. Those are pretty bad sources of information if the biggest challenge of early-stage investing is judging the founders, because the founder is in "pitch mode." YC alums in a position to invest can interact with the founders for months in very social and relaxed settings as peers. That's orders of magnitude more data than what you get in normal angel investing.
- vegashacker 16y ago
  I agree Sam may be in an especially good position to make guesses about the future of companies, but that doesn't explain where the investment money comes from.
  - Psyonic 16y ago
    Also, to be an accredited investor, don't you need a net worth of like $1 million? So having 50k lying around doesn't cut it. Although there might be exceptions to that rule... I'm definitely no expert on the subject.
    - asmithmd1 16y ago
      Here are the rules for being an accredited investor: http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm "income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year" And it is not like you have to submit to an audit to the company before sending them a check -- all you have to do is sign something that says you are accredited. That way you will have a harder time suing the company claiming you were mis-led or whatever.
      - Psyonic 16y ago
        Thanks for looking that up. Looks like it's not terribly difficult to qualify.
    - jfarmer 16y ago
      "Net worth" does not mean liquid. Sam's equity in Loopt is easily worth more than $1MM.
  - asmithmd1 16y ago
    it may have been a relatively small amount -- like $20k to $50k -- all the investors listed only invested $1MM in total
  - mikeryan 16y ago
    Founders can cash out at various funding rounds, so it might be that Sam took some money out during Loopt's funding rounds. I'm assuming the same for Kevin Rose who's a pretty active angel. Likely the sums invested are fairly small as well. The Foursquare guys took $4M home out of a current funding round http://www.theequitykicker.com/2010/07/15/foursquare-founders-took-cash-out-in-their-recent-series-b-round/ http://www.theequitykicker.com/2010/07/15/foursquare-founder...
badgerface 16y ago
It might be Sequoia's money? I know Drew from Dropbox has a similar relationship with Sequoia. That would be interesting given that Sequoia is an investor in Kayak as well.
- dchs 16y ago
  How would that work?
  - jackowayed 16y ago
    YC is (largely? entirely?) investing the money of Sequoia and other investors as well: http://techcrunch.com/2010/05/21/y-combinator-closes-new-8-25-million-fund-sequoia-is-lead-investor/ http://techcrunch.com/2010/05/21/y-combinator-closes-new-8-2... So it would be the same basic idea. Sequoia sees that there's a lot of money to be made by investing in good startups early, but also sees that there are people who are better than them at doing so, since their expertise is traditional VC rounds. So they give YC money to invest in super-early-stage startups, and YC and Sequoia share the returns. There's no reason they couldn't do the same thing for someone who's interesting in angel investing but doesn't have the money or doesn't want to risk his own money.
  - deleted 16y ago
    [deleted]
jfarmer 16y ago
Sam is probably an accredited investor due to the value of his Loopt stock. Their last round was valued at something like $500MM. From there he can invest whatever he wants -- $1k, $10k, $100k, etc. -- assuming the entrepreneurs agree.
deleted 16y ago
[deleted]

It surprised me to see Sam Altman on this list. Where does that money come from? Maybe Loopt is very profitable and he takes a big salary? Or maybe he had cash before Loopt?

timcederman 16y ago

I have seen a few YC folks, currently running their own successful company (Loopt is one example, HeyZap is another) investing in new YC companies. I'm also interested in the rationale.

leelin 16y ago

Most angel investors need to decide whether to put up the money based on a few one-hour pitches and what they read in the press. Those are pretty bad sources of information if the biggest challenge of early-stage investing is judging the founders, because the founder is in "pitch mode." YC alums in a position to invest can interact with the founders for months in very social and relaxed settings as peers. That's orders of magnitude more data than what you get in normal angel investing.

vegashacker 16y ago
I agree Sam may be in an especially good position to make guesses about the future of companies, but that doesn't explain where the investment money comes from.
- Psyonic 16y ago
  Also, to be an accredited investor, don't you need a net worth of like $1 million? So having 50k lying around doesn't cut it. Although there might be exceptions to that rule... I'm definitely no expert on the subject.
  - asmithmd1 16y ago
    Here are the rules for being an accredited investor: http://www.sec.gov/answers/accred.htm http://www.sec.gov/answers/accred.htm "income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year" And it is not like you have to submit to an audit to the company before sending them a check -- all you have to do is sign something that says you are accredited. That way you will have a harder time suing the company claiming you were mis-led or whatever.
    - Psyonic 16y ago
      Thanks for looking that up. Looks like it's not terribly difficult to qualify.
  - jfarmer 16y ago
    "Net worth" does not mean liquid. Sam's equity in Loopt is easily worth more than $1MM.
- asmithmd1 16y ago
  it may have been a relatively small amount -- like $20k to $50k -- all the investors listed only invested $1MM in total
- mikeryan 16y ago
  Founders can cash out at various funding rounds, so it might be that Sam took some money out during Loopt's funding rounds. I'm assuming the same for Kevin Rose who's a pretty active angel. Likely the sums invested are fairly small as well. The Foursquare guys took $4M home out of a current funding round http://www.theequitykicker.com/2010/07/15/foursquare-founders-took-cash-out-in-their-recent-series-b-round/ http://www.theequitykicker.com/2010/07/15/foursquare-founder...

badgerface 16y ago

It might be Sequoia's money? I know Drew from Dropbox has a similar relationship with Sequoia. That would be interesting given that Sequoia is an investor in Kayak as well.

dchs 16y ago
How would that work?
- jackowayed 16y ago
  YC is (largely? entirely?) investing the money of Sequoia and other investors as well: http://techcrunch.com/2010/05/21/y-combinator-closes-new-8-25-million-fund-sequoia-is-lead-investor/ http://techcrunch.com/2010/05/21/y-combinator-closes-new-8-2... So it would be the same basic idea. Sequoia sees that there's a lot of money to be made by investing in good startups early, but also sees that there are people who are better than them at doing so, since their expertise is traditional VC rounds. So they give YC money to invest in super-early-stage startups, and YC and Sequoia share the returns. There's no reason they couldn't do the same thing for someone who's interesting in angel investing but doesn't have the money or doesn't want to risk his own money.
- deleted 16y ago
  [deleted]

jfarmer 16y ago

Sam is probably an accredited investor due to the value of his Loopt stock. Their last round was valued at something like $500MM. From there he can invest whatever he wants -- $1k, $10k, $100k, etc. -- assuming the entrepreneurs agree.

deleted 16y ago

[deleted]