4 ms·
In PG’s era of YC, it generally looks like 2 guys with 2 laptops in the cheapest apartment in Mountain View.
by ladon86 5y ago
In PG’s era of YC, it generally looks like 2 guys with 2 laptops in the cheapest apartment in Mountain View.
- darksaints 5y agoAnd that two guys with laptops in a cheap apartment in mountain view might be a majority of the cases they see, but how will they know unless they see it? I've seen plenty of fake-it-til-you-make-it startups that immediately go out an sign a lease for AAA office space because they think they need a cool office before anybody will take them seriously. And that is a massive red flag to a VC...one that shows up on a balance sheet. For an early stage company, nobody cares about your assets or your shit estimates of the value of your intellectual property or goodwill. But payables and receivables can definitely be a dealbreaker, and I've never known a single VC that would sign a check without an understanding of where the company, no matter how new, stands with them.
- beambot 5y agoFinancially, YC's decision made sense regardless of balance sheets or business plans: YC was investing at a $1.5M valuation (7% for $100k). By selecting a pair of smart engineers, the acquihire potential often exceeded the invested value. Furthermore, their interviews cut to the underlying cause (scrappiness & maker mentality), which inherently eliminated certain effects (AAA office spaces) without ever seeing a balance sheet.
- enra 5y agoI raised $4M seed round on a SAFE from two well known multi $B fund and others. I don’t think anyone asked for a balance sheet. The company was 3mo old, so there wasn’t much (no revenue, hardly any expenses) and we didn’t even have an accountant yet. There was some basic due diligence questions that us founders had to answer but very light still. I’d assume most seed deals on SAFEs or even priced rounds are similar.