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> The current total market capitalization of YC companies is around $150 billion. The YC network now has over 4,000 alumni and 1,900 companies, and it has becom

> The current total market capitalization of YC companies is around $150 billion. The YC network now has over 4,000 alumni and 1,900 companies, and it has become a reliable source of advice, customers, friendship, and support for YC founders. A question for people more savvy about VC than me. What's your ballpark estimate on YC's bottom line? They put $150K at least into each company, right? So that's $285M right there? But some of those are non-profits, in which case they only put $100K into the company. And then they get 7% of each company, which would theoretically be $10.5B? $150B * 0.07 = $10.5B (just removing non-profits from the equation). But accounting for dilution, it would probably be less than 7% ownership? In other words, I guess we'd need an estimate of how much YC actually owns in its overall portfolio. Forgive me if my numbers are wildly off or naive. VC isn't my domain.

tim333 8y ago
I think its about 3% as the 7% gets diluted so approx $4.5bn for the assets. Of course a lot of that is illiquid and unrealised. The GAAP bottom line would be a lot less and not give a very accurate picture as it wouldn't include most of the gains.
- tyre 8y ago
  Their 7% stake has pro-rata and YC publicly states that it will follow-on to maintain that ownership up to $300m valuation. The 7% ownership also allows YC Continuity to be more attractive to later stage companies. If YC already has a 7% stake, then it only needs to invest an additional post-money 13% in order to raise its ownership to 20%. A new firm coming to the cap table would want to invest 20% post-money. So, if the company doesn't need 20% capital, then YC Continuity has a significant advantage.
  - deleted 8y ago
    [deleted]
  - jdoliner 8y ago
    I think YC only fairly recently started exercising their pro-rata. IIRC there was a while before YC Continuity was started when they didn't have funds allocated for pro-rata. They've had it for a while now but I think they may have missed out on some of the earlier successes, like Dropbox, Airbnb and Stripe, which is where a lot of the gains have been realized at this point.
    - deleted 8y ago
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- calgaryeng 8y ago
  On the contrary - GAAP earnings give the most accurate picture of cold hard cash. That is the reason they exist , and securities regulators are specific about its definition. Paper gains are notoriously easy to stretch.
  - tim333 8y ago
    Maybe but say YC put $20k into Airbnb for a stake now worth $1bn and $80k into 4 other statups that went bust. GAAP would show a net loss of $80k which would not reflect very accurately how they were doing. GAAP has been designed more to provide a consistent way of calculating corporate income tax than to accurately show how a company is doing.
    - lugg 8y ago
      You're welcome to suggest a more accurate way of consistently accounting income tax requirements.
      - hn_throwaway_99 8y ago
        That seems like an ungenerous interpretation of the parent's comment. I didn't take that comment to mean that GAAP is not a good way to calculate income tax, but that it's not a good way to judge the true financial prospects of a company.
        lugg 8y ago
        I took it the same way. If there is a better way to judge the true financial prospects of a company we should be taxing them accordingly. My point was that GAAP is probably the best we're going to do because of the consistency problems. The moment you start applying special rules or caveats per company you stop being able to compare companies properly as an investor, at which point the measure becomes useless as a talking point as well as being useless for tax calculations. My original post was framed against tax because it doesn't really make a difference. If the new method is good enough for comparison between companies it's good enough to replace GAAP - unless it's not.
- mathattack 8y ago
  Maybe less. They’ve sold off shares in secondary markets too. But still very impressive: more than a 10x return.

tim333 8y ago

I think its about 3% as the 7% gets diluted so approx $4.5bn for the assets. Of course a lot of that is illiquid and unrealised. The GAAP bottom line would be a lot less and not give a very accurate picture as it wouldn't include most of the gains.

tyre 8y ago
Their 7% stake has pro-rata and YC publicly states that it will follow-on to maintain that ownership up to $300m valuation. The 7% ownership also allows YC Continuity to be more attractive to later stage companies. If YC already has a 7% stake, then it only needs to invest an additional post-money 13% in order to raise its ownership to 20%. A new firm coming to the cap table would want to invest 20% post-money. So, if the company doesn't need 20% capital, then YC Continuity has a significant advantage.
- deleted 8y ago
  [deleted]
- jdoliner 8y ago
  I think YC only fairly recently started exercising their pro-rata. IIRC there was a while before YC Continuity was started when they didn't have funds allocated for pro-rata. They've had it for a while now but I think they may have missed out on some of the earlier successes, like Dropbox, Airbnb and Stripe, which is where a lot of the gains have been realized at this point.
  - deleted 8y ago
    [deleted]
calgaryeng 8y ago
On the contrary - GAAP earnings give the most accurate picture of cold hard cash. That is the reason they exist , and securities regulators are specific about its definition. Paper gains are notoriously easy to stretch.
- tim333 8y ago
  Maybe but say YC put $20k into Airbnb for a stake now worth $1bn and $80k into 4 other statups that went bust. GAAP would show a net loss of $80k which would not reflect very accurately how they were doing. GAAP has been designed more to provide a consistent way of calculating corporate income tax than to accurately show how a company is doing.
  - lugg 8y ago
    You're welcome to suggest a more accurate way of consistently accounting income tax requirements.
    - hn_throwaway_99 8y ago
      That seems like an ungenerous interpretation of the parent's comment. I didn't take that comment to mean that GAAP is not a good way to calculate income tax, but that it's not a good way to judge the true financial prospects of a company.
      - lugg 8y ago
        I took it the same way. If there is a better way to judge the true financial prospects of a company we should be taxing them accordingly. My point was that GAAP is probably the best we're going to do because of the consistency problems. The moment you start applying special rules or caveats per company you stop being able to compare companies properly as an investor, at which point the measure becomes useless as a talking point as well as being useless for tax calculations. My original post was framed against tax because it doesn't really make a difference. If the new method is good enough for comparison between companies it's good enough to replace GAAP - unless it's not.
mathattack 8y ago
Maybe less. They’ve sold off shares in secondary markets too. But still very impressive: more than a 10x return.