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There is, of course, a potential conflict of interest anytime an investor gives advice about other investors. But not as much as you'd think, when the investors
by tlb 7y ago
There is, of course, a potential conflict of interest anytime an investor gives advice about other investors. But not as much as you'd think, when the investors specialize in different stages.
The rounds typically go:
seed - angel - series A - series B - series C ...
YC only does seed and series B onwards, so it can give unbiased advice about angel and series A. By the time a startup is doing series B, they should have in-house experts.
- Tomte 7y agoI've never understood these terms. Is there a clear definition for those? Seed is very little money, angel is more money, but still small enough that a wealthy individual can provide it? Series A, B and C are pretty much the same, it just so happens that companies usually re-capitalize three times before going bust or IPO? (The whole space is very perplexing, the idea of diluting earlier investors sounds outright fraud-like to me, but obviously it's well-accepted and probably priced in.)
- icedchai 7y agoAngels are often part of seed rounds. Differentiating between the two seems pointless. Also dilution is part of equity. There is nothing fraudulent about it.
- soup10 7y agounwanted dilutions, share issuance dilution scams, controlling share dilution schemes, clawbacks... there's a lot of unpleasant things that can happen to minority stakeholders
- deleted 7y ago[deleted]
- nabnob 7y agoNot sure I follow your reasoning. Even if YC only does seed and series B, investments in other stages have an impact their investment. YC has incentive to give advice that aligns with their interests.