6 ms·
It’s not high risk high reward, it’s high risk low reward
by logicslave12 6y ago
It’s not high risk high reward, it’s high risk low reward
- mlthoughts2018 6y agoExactly. 8-20x is a massively unlikely outcome so there’s huge risk. What do you get for taking a bet on that risk? Mere parity with annualized first year compensation elsewhere. That is a very low reward for such dramatic risk.
- naniwaduni 6y agoIs "risk" even the right thing to call a too-low-to-expect probability of a desirable event? Is playing the lottery a "risk"?
- sokoloff 6y agoI would saying playing the lottery is most certainly a risk (of the money you spent on tickets).
- e1g 6y agoSome people might think "10-20x growth sounds likely for a startup, no?". Frequently, at "Series A" a startup is valued at $20-40M. Getting a 10-20x multiple on that means it should get to $200M-$1B range. Only 5% of all YCombinator companies hit that milestone (~100 companies from ~2,000 deals). Odds for a startups not backed by YC & co, would be lower. So no, not that likely, even if you're as early as day 1 of Series A.
- Judgmentality 6y agoYou're comparing seed funding (Y Combinator) and series A funding - most YC companies have yet to raise a series A. The other thing is that most YC companies are young and still have time to grow. I think you're comparing apples to oranges and trying to make a quantitative conclusion.
- sillysaurusx 6y agoIf a yc co from 5 years ago still hasn’t raised a series A, it’s probably dead. (I would push this to “1 year ago,” but yc invests in long term projects now like biotech.)
- e1g 6y agoIt's fair to point out that if a company gets to Series A, it is substantially de-risked. IIRC, ~30% of YC startups get to Series A, so this milestone is material.
- deleted 6y ago[deleted]