4 ms·

On the Y Combinator Summer 2021 batch

maximilianroos 5y ago
> At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch Even if they could select them, how do they propose to invest? These are competitive processes; sophomoric Medium posts are unlikely to make them stand out.
cowpig 5y ago
This is an article full of interesting data, but the opening statement made me laugh: > At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch
- staunch 5y ago
  Such rebels, bravely front running YC startups batches... /s
  - sillysaurusx 5y ago
    Surprising comment from you. I think hardy would agree that this is a good idea.
    - exdsq 5y ago
      It might be a good idea but it's hardly rebellious. Imagine trying to think of any definition of 'rebellion' that allows for a VC firm front-running startups ran by founders from prestigious universities signalled by their graduate jobs.
      - sillysaurusx 5y ago
        I mean, I agree. But Y Combinator is hardly a function combinator. If the worst criticism is the name, it's a signal that may be worth paying attention to.
        OnlineGladiator 5y ago
        A better criticism is it's impossible to come up with an objective definition for "top" for seed stage companies, it's really just their opinion of who they like the best and they're masquerading it as being successful investors. They don't have a track record and they're just regurgitating what every investor says - "we pick the best because it's our job!" They're spewing bullshit. That opening line alone tells me they're copying every other VC (and most VCs lose money) while simultaneously portraying themselves as being better than every other VC. YC succeeded by completely subverting what everybody thought VC had to be. You can't expect to be better by doing the same thing as everyone else.
        sillysaurusx 5y ago
        That is indeed a better criticism, but it happens to follow the same template as another common startup criticism: "It hasn't been tried before, so we don't know whether it will work." Yes. That's true. It might not work. And you're probably even correct. But that's always true, and the most valuable cases are those that work when most people don't expect them to. http://paulgraham.com/swan.html http://paulgraham.com/swan.html You say that every other VC does this. But if other VCs are training ML models, they don't seem to be publishing their results, so I'm inclined to say that this is new. Is it going to work? Well, we'll have to see. But as with most startups, the answer is "probably not, but the chance may be significantly better than random."
        _hyn3 5y ago
        > But that's always true, and the most valuable cases are those that work when most people don't expect them to. http://paulgraham.com/swan.html http://paulgraham.com/swan.html If they are looking for swans that work when people don't expect them to, they should probably be looking for those swans somewhere else*, not the top 3% of an incubator that probably graduates proportionately more successful startups than any university. The issue that everyone is calling out here is that they name themselves "Rebel" when they're doing exactly the same thing that every other VC firm is, but (apparently) not even as well -- at least they should say "Founder Friendly", etc. * Generally startups that might become unexpected swans will be found outside of startup hubs like silicon valley.
randmeerkat 5y ago
I actually don’t find anything insightful about Rebel’s approach. They paid someone too much money to make a machine learning model that then informed their biases that highly educated people from prestigious universities and previous FANG jobs are the likely candidates of success. I’d rather work with a fund that had managers who understood due diligence, market analysis, and truly desired finding the best idea, not just pushing their own preconceived biases through pseudo-technical analysis.
- mushufasa 5y ago
  Yes, the idea that an inherently backwards-looking data-driven approach is a good way to evaluate an inherently no-history early stage company seems misguided to me. I'm sure their fund probably does okay though. It's the same set of biases as traditional VC. Not very rebellious, though.
  - OnlineGladiator 5y ago
    > I'm sure their fund probably does okay though. It's the same set of biases as traditional VC. Most VC firms lose money.
- jjtheblunt 5y ago
  that fund is Berkshire Hathaway, more or less?
  - mdorazio 5y ago
    Not really. Berkshire's general model is to buy mature businesses that are either troubled or undervalued and then "fix" them to reach a higher valuation within their overall portfolio. That's somewhat different than doing a deep business analysis on an early stage company to determine its long-term potential. Interestingly, I think the latter is actually closer to what VCs focused on before YC took center stage.
- deleted 5y ago
  [deleted]
avl999 5y ago
> At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch. I immediately closed the article after reading that.
- simonebrunozzi 5y ago
  Hmm... Why? It seems a bland, but rational statement. It's a simple way to say that they strive to pick the best ones. Yes, it's almost useless, but it's a way to get the conversation going.
  - YPPH 5y ago
    It makes me a little queezy, but it's hard to put a pin on why. Perhaps it comes across as a little uppity.
    - okhobb 5y ago
      Sounds much like the old saw: "we only hire the best!" Do any VCs strive to invest in, say, the second quartile of YC batches?
      - deleted 5y ago
        [deleted]
      - YPPH 5y ago
        That captures it well.
      - sjtindell 5y ago
        I wonder. Perhaps by choosing the second or third quartile I’ll get more equity for a much lower price in companies that perform only marginally worse? Or, with some luck, even better? Like trying to find alpha in founders who are women or people of color and may get statistically less attention but have equally good ideas.
  - kortilla 5y ago
ZephyrBlu 5y ago
YC's hard on for ex-Googlers seems odd, though maybe it's incidental. The focus on top schools is quite boring as well, but I guess there's still alpha there. It mostly seems like an easy filter for intelligence and conscientiousness. Rebel's use of ML to predict future winners is odd to me, since it completely relies on interpolating within the set of past winners. I guess it might work, but it's not creative and seems highly correlated with the rest of the VC 'market'.
deleted 5y ago
[deleted]
DantesKite 5y ago
"...the single greatest success predictor is whether the founders had a successful startup in the past."
- jl2718 5y ago
  The nature of investment theses are self-reinforcing because they are based mostly on predicting the beliefs of others. This one even more so than the rest.
jl2718 5y ago
Where does one go to find startups that are not the top 3-4% of the top 0.1% of applicants of the top 1% that would even consider applying to YC? Like, maybe someone who really just has an idea and wants just enough money to work on it and survive the journey.

> At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch Even if they could select them, how do they propose to invest? These are competitive processes; sophomoric Medium posts are unlikely to make them stand out.

cowpig 5y ago

This is an article full of interesting data, but the opening statement made me laugh: > At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch

staunch 5y ago
Such rebels, bravely front running YC startups batches... /s
- sillysaurusx 5y ago
  Surprising comment from you. I think hardy would agree that this is a good idea.
  - exdsq 5y ago
    It might be a good idea but it's hardly rebellious. Imagine trying to think of any definition of 'rebellion' that allows for a VC firm front-running startups ran by founders from prestigious universities signalled by their graduate jobs.
    - sillysaurusx 5y ago
      I mean, I agree. But Y Combinator is hardly a function combinator. If the worst criticism is the name, it's a signal that may be worth paying attention to.
      - OnlineGladiator 5y ago
        A better criticism is it's impossible to come up with an objective definition for "top" for seed stage companies, it's really just their opinion of who they like the best and they're masquerading it as being successful investors. They don't have a track record and they're just regurgitating what every investor says - "we pick the best because it's our job!" They're spewing bullshit. That opening line alone tells me they're copying every other VC (and most VCs lose money) while simultaneously portraying themselves as being better than every other VC. YC succeeded by completely subverting what everybody thought VC had to be. You can't expect to be better by doing the same thing as everyone else.
        sillysaurusx 5y ago
        That is indeed a better criticism, but it happens to follow the same template as another common startup criticism: "It hasn't been tried before, so we don't know whether it will work." Yes. That's true. It might not work. And you're probably even correct. But that's always true, and the most valuable cases are those that work when most people don't expect them to. http://paulgraham.com/swan.html http://paulgraham.com/swan.html You say that every other VC does this. But if other VCs are training ML models, they don't seem to be publishing their results, so I'm inclined to say that this is new. Is it going to work? Well, we'll have to see. But as with most startups, the answer is "probably not, but the chance may be significantly better than random."
        _hyn3 5y ago
        > But that's always true, and the most valuable cases are those that work when most people don't expect them to. http://paulgraham.com/swan.html http://paulgraham.com/swan.html If they are looking for swans that work when people don't expect them to, they should probably be looking for those swans somewhere else*, not the top 3% of an incubator that probably graduates proportionately more successful startups than any university. The issue that everyone is calling out here is that they name themselves "Rebel" when they're doing exactly the same thing that every other VC firm is, but (apparently) not even as well -- at least they should say "Founder Friendly", etc. * Generally startups that might become unexpected swans will be found outside of startup hubs like silicon valley.

randmeerkat 5y ago

I actually don’t find anything insightful about Rebel’s approach. They paid someone too much money to make a machine learning model that then informed their biases that highly educated people from prestigious universities and previous FANG jobs are the likely candidates of success. I’d rather work with a fund that had managers who understood due diligence, market analysis, and truly desired finding the best idea, not just pushing their own preconceived biases through pseudo-technical analysis.

mushufasa 5y ago
Yes, the idea that an inherently backwards-looking data-driven approach is a good way to evaluate an inherently no-history early stage company seems misguided to me. I'm sure their fund probably does okay though. It's the same set of biases as traditional VC. Not very rebellious, though.
- OnlineGladiator 5y ago
  > I'm sure their fund probably does okay though. It's the same set of biases as traditional VC. Most VC firms lose money.
jjtheblunt 5y ago
that fund is Berkshire Hathaway, more or less?
- mdorazio 5y ago
  Not really. Berkshire's general model is to buy mature businesses that are either troubled or undervalued and then "fix" them to reach a higher valuation within their overall portfolio. That's somewhat different than doing a deep business analysis on an early stage company to determine its long-term potential. Interestingly, I think the latter is actually closer to what VCs focused on before YC took center stage.
deleted 5y ago
[deleted]

avl999 5y ago

> At Rebel Fund, our job is to invest in the top 3–4% startups in each new Y Combinator (YC) batch. I immediately closed the article after reading that.

simonebrunozzi 5y ago
Hmm... Why? It seems a bland, but rational statement. It's a simple way to say that they strive to pick the best ones. Yes, it's almost useless, but it's a way to get the conversation going.
- YPPH 5y ago
  It makes me a little queezy, but it's hard to put a pin on why. Perhaps it comes across as a little uppity.
  - okhobb 5y ago
    Sounds much like the old saw: "we only hire the best!" Do any VCs strive to invest in, say, the second quartile of YC batches?
    - deleted 5y ago
      [deleted]
    - YPPH 5y ago
      That captures it well.
    - sjtindell 5y ago
      I wonder. Perhaps by choosing the second or third quartile I’ll get more equity for a much lower price in companies that perform only marginally worse? Or, with some luck, even better? Like trying to find alpha in founders who are women or people of color and may get statistically less attention but have equally good ideas.
- kortilla 5y ago

ZephyrBlu 5y ago

YC's hard on for ex-Googlers seems odd, though maybe it's incidental. The focus on top schools is quite boring as well, but I guess there's still alpha there. It mostly seems like an easy filter for intelligence and conscientiousness. Rebel's use of ML to predict future winners is odd to me, since it completely relies on interpolating within the set of past winners. I guess it might work, but it's not creative and seems highly correlated with the rest of the VC 'market'.

deleted 5y ago

[deleted]

DantesKite 5y ago

"...the single greatest success predictor is whether the founders had a successful startup in the past."

jl2718 5y ago
The nature of investment theses are self-reinforcing because they are based mostly on predicting the beliefs of others. This one even more so than the rest.

jl2718 5y ago

Where does one go to find startups that are not the top 3-4% of the top 0.1% of applicants of the top 1% that would even consider applying to YC? Like, maybe someone who really just has an idea and wants just enough money to work on it and survive the journey.