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Let's compare seed valuations & dilutions of : a YC company vs Non YC Company YC : takes 7% for 125K and then let's say you raise $1m at $12m post money. Total

by samblr 6y ago

Let's compare seed valuations & dilutions of : a YC company vs Non YC Company YC : takes 7% for 125K and then let's say you raise $1m at $12m post money. Total diluted 15%. Non YC : If you want to raise $1m for same 15% dilution - your post money would be $6.5m. So these are pure numbers[1] With YC, I guess Founders' gain a network, bay area connections etc [1] : https://docs.google.com/spreadsheets/d/1kxOBF0CPhcktmgFvAZtYJVHrlf-hMw7nsw8S56dmt1A https://docs.google.com/spreadsheets/d/1kxOBF0CPhcktmgFvAZtY...

aerosmile 6y ago
Highly underrated comment. A lot of people are approaching this topic from a philosophical point of view, which tells me that they haven't gone through YC's Demo Day and don't understand how it's different from other incubators' Demo Days. It's very different - there is an entire cottage industry of YC-only or YC-preferred funds built around this event, and if you play your cards correctly, those funds will be fighting to get onto your cap table. I do know that there are investors all over the world, but investors don't behave like this anywhere else.
- kirillzubovsky 6y ago
  Although definitely very helpful to YC folks (YCS12 here), I do find it kind of funny that YC-preferred funds have emerged, since they introduce the same biases YC was meant to remove. It's a natural process, and there is no such thing as not being biased (as it is a bias in itself), but the signaling of being part of YC is definitely huge, especially first time, and for outside of the Bay. Investors are people too.
pedalpete 6y ago
Can you enlighten as to the assumption that the YC backed startup has a $12m post and non-yc has a $6.5m post?
- samblr 6y ago
  :) Angel list had a page where one could find out the valuation based on various filters. Unable to find that now. However, many YC companies fail to raise in demo day! And there are non-yc companies who 've gone to raise $3m-$5m in seed alone with just a deck. The latter had the advantage of proven track records etc. Also, the higer valuations at seed stage can come back to hurt in Series-A.

by samblr 6y ago

aerosmile 6y ago

Highly underrated comment. A lot of people are approaching this topic from a philosophical point of view, which tells me that they haven't gone through YC's Demo Day and don't understand how it's different from other incubators' Demo Days. It's very different - there is an entire cottage industry of YC-only or YC-preferred funds built around this event, and if you play your cards correctly, those funds will be fighting to get onto your cap table. I do know that there are investors all over the world, but investors don't behave like this anywhere else.

kirillzubovsky 6y ago
Although definitely very helpful to YC folks (YCS12 here), I do find it kind of funny that YC-preferred funds have emerged, since they introduce the same biases YC was meant to remove. It's a natural process, and there is no such thing as not being biased (as it is a bias in itself), but the signaling of being part of YC is definitely huge, especially first time, and for outside of the Bay. Investors are people too.

pedalpete 6y ago

Can you enlighten as to the assumption that the YC backed startup has a $12m post and non-yc has a $6.5m post?

samblr 6y ago
:) Angel list had a page where one could find out the valuation based on various filters. Unable to find that now. However, many YC companies fail to raise in demo day! And there are non-yc companies who 've gone to raise $3m-$5m in seed alone with just a deck. The latter had the advantage of proven track records etc. Also, the higer valuations at seed stage can come back to hurt in Series-A.