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In many places outside Silicon Valley, you'll find that local investors are reluctant to deviate from 1x revenue or 10x EBITDA for "venture investing" valuation
by beambot 5y ago
In many places outside Silicon Valley, you'll find that local investors are reluctant to deviate from 1x revenue or 10x EBITDA for "venture investing" valuations -- which are really more akin to mature company / PE-style worldviews. For companies working in those environments, you could easily justify YCombinator as a conduit to Silicon Valley investor networks with loftier valuations & hypergrowth mindsets.
- forgingahead 5y agoCertainly makes sense - though the piper needs to be paid eventually though - loftier valuations eventually need to be justified, else companies eventually suffer a down-round or worse, founders get kicked out or the entire company gets shut down. Seems like a Russian-Roulette way of playing business - hope you can exit with strong wealth before you find the chamber with the bullet in it.
- beambot 5y agoYes, it's a different risk profile that doesn't suit all businesses. VCs are in the business of power-law returns: They're looking for homeruns, not base hits. It's really important for founders to select the right sources of capital for their business. The good news: YC itself is a pretty good actor on that front -- the new $500k uncapped SAFE helps founders retain optionality without fully committing them to hypergrowth trajectories.