4 ms·
YC is trying to buy more pro rata with this deal, which is what a ton of YC founders complain about in later rounds. This will make things worse.
by solaarphunk 5y ago
YC is trying to buy more pro rata with this deal, which is what a ton of YC founders complain about in later rounds. This will make things worse.
- tnorthcutt 5y agoI'm not very familiar with VC funding/equity structures; would you mind expanding on this?
- gringoDan 5y agoNot OP, but in one sentence: YC will give you an additional $375k now, in exchange for the promise to give them equity at the same terms you give other investors when you raise your next round of funding. The criticism here is that you need to give up a higher % of your company down the road.
- lupire 5y agoHow so? Because later investors force more cash than founders need?
- mcv 5y agoWhy would you need to give up a higher percentage of your company? Can't you just give those later investors a smaller share in exchange for $375k less money? And getting the money now instead of later sounds to me like an amazing deal; you can continue for longer before you need to find those later investors, and by that time, you'll be worth more and get a better deal from them, and therefore also get a better deal from YC. I don't know much about startup financing, but to my layman's eyes, this sounds like a good deal.
- dalton 5y agoHi there - this is not a pro-rata investment, we are investing this 375K right away
- solaarphunk 5y agoI understand that it’s invested right away, but it buys you more pro rata in future rounds than founders currently give up to YC under the deal.