4 ms·

Honestly, I'm surprised that nobody did this sooner. Hell, didn't Conway invest in six of the last round anyhow? This is sort of like going to the race track a

Honestly, I'm surprised that nobody did this sooner. Hell, didn't Conway invest in six of the last round anyhow? This is sort of like going to the race track and betting on every horse. Except at this particular race track, the horses are all above average and multiple horses can win each race. I'd take those odds.

bl4k 16y ago
you almost rescued the analogy, but not quiet.
- peteforde 16y ago
  Edits welcome. Where did I go wrong?
  - Swannie 16y ago
    Hmm, it's more like investing in/always betting on a solid racing stable. You know the jockeys they use are great (investor community), you know their horses are from great stock (top applicants), you know that the breeders, handlers and trainers (advisors and partners) are THE most experienced in the area. You know the stable only enter horses into races (markets) where they think the odds of placing are good, or the opportunity cost is so low for a potential outsider. Sure there are other stables, and sure, some of the horses in this figurative stable are co-owned by people with very different aims from you (boot strapping cofounders?), and some are backed some of your competitors.
  - JoeAltmaier 16y ago
    Its exactly like ... investing in a bunch of promising, vetted business plans with motivated founders!
mdda 16y ago
The clever thing about this is that Yuri doesn't have any of the due-diligence costs of Ron Conway : He's outsourced it all. OTOH, maybe/probably Ron Conway actually enjoys the thrill of the hunt for new exciting stuff, so he doesn't consider it a particular cost. Right now, according to the article, YC (pg) is happy about the situation : it improves their brand, helps entrepreneurs, etc. But I'm sure that they'll realize that Yuri just got in at a better valuation (on average) than they did, but they're doing all the work. Of course, they probably already have realized this, but they don't have many other options now - other than inserting 'poison pill' anti-freeloader terms into their deals...
- schwabacher 16y ago
  Why is he in at a better valuation than YC? From what I read it seemed like he loans 150k for an option to be repayed in stock at whatever valuation they take their first round of funding at? YC's 30k goes in at somthing like a 0.5 million valuation, so i would assume the rounds most of these companies are taking are higher than that?
  - mdda 16y ago
    Mea Culpa - you're absolutely right on the valuation side. I think that the majority of value in a YC investment is not in the actual cash, though. And in some ways, this provides a side-by-side comparison of the difference between a 'pure money' investor and a true 'value added' investor should be getting. Given how (YC) entrepreneur-friendly this is, there must be a whole lot of soul-searching going on at VCs and other angels now : Somehow, the private equity space just got an index investor.
  - hristov 16y ago
    You are right. No-one gets in at a better valuation than YC. Of course they deserve it, they created the whole phenomenon.

bl4k 16y ago

you almost rescued the analogy, but not quiet.

peteforde 16y ago
Edits welcome. Where did I go wrong?
- Swannie 16y ago
  Hmm, it's more like investing in/always betting on a solid racing stable. You know the jockeys they use are great (investor community), you know their horses are from great stock (top applicants), you know that the breeders, handlers and trainers (advisors and partners) are THE most experienced in the area. You know the stable only enter horses into races (markets) where they think the odds of placing are good, or the opportunity cost is so low for a potential outsider. Sure there are other stables, and sure, some of the horses in this figurative stable are co-owned by people with very different aims from you (boot strapping cofounders?), and some are backed some of your competitors.
- JoeAltmaier 16y ago
  Its exactly like ... investing in a bunch of promising, vetted business plans with motivated founders!

mdda 16y ago

The clever thing about this is that Yuri doesn't have any of the due-diligence costs of Ron Conway : He's outsourced it all. OTOH, maybe/probably Ron Conway actually enjoys the thrill of the hunt for new exciting stuff, so he doesn't consider it a particular cost. Right now, according to the article, YC (pg) is happy about the situation : it improves their brand, helps entrepreneurs, etc. But I'm sure that they'll realize that Yuri just got in at a better valuation (on average) than they did, but they're doing all the work. Of course, they probably already have realized this, but they don't have many other options now - other than inserting 'poison pill' anti-freeloader terms into their deals...

schwabacher 16y ago
Why is he in at a better valuation than YC? From what I read it seemed like he loans 150k for an option to be repayed in stock at whatever valuation they take their first round of funding at? YC's 30k goes in at somthing like a 0.5 million valuation, so i would assume the rounds most of these companies are taking are higher than that?
- mdda 16y ago
  Mea Culpa - you're absolutely right on the valuation side. I think that the majority of value in a YC investment is not in the actual cash, though. And in some ways, this provides a side-by-side comparison of the difference between a 'pure money' investor and a true 'value added' investor should be getting. Given how (YC) entrepreneur-friendly this is, there must be a whole lot of soul-searching going on at VCs and other angels now : Somehow, the private equity space just got an index investor.
- hristov 16y ago
  You are right. No-one gets in at a better valuation than YC. Of course they deserve it, they created the whole phenomenon.