6 ms·

Based on the info available, here are some of the differences between the new a16z START program and YC: - No standard deal (looks like a16z will negotiate equ

Based on the info available, here are some of the differences between the new a16z START program and YC: - No standard deal (looks like a16z will negotiate equity separately with each startup) - Potentially double the check size (up to $1M compared to the standard YC $500k deal) - Much smaller batch sizes (currently 11 in START, compared to 319 in YC W21) - The obvious: different network connections, mentors, and track records

bspear 4y ago
A16Z's superpower is branding and getting their name out there. Their fund returns are well below Sequoia & co
- gojomo 4y ago
  Not sure this "well below" knock is true in recent years – what's the best source of data? But even if it was: is a VC's multi-decade record more valuable to a founder than other in-the-now considerations? And, while ideally VCs & founders in the same firm rise with the same tide, cooperatively, synergistically, there can be a margin at which a VC's lower returns could mean higher returns for other owners, like the founders & team.
- vmception 4y ago
  are fund returns tracked properly... anywhere? My experience with being a limited partner (LP) in ... places... is that each LP experiences wildly different returns based on what deals they are part of. Its not like you invest in these kinds of funds at a certain watermark and hope your investment is at the time where things go up. you have no exposure to prior investments no matter how awesome or poor they were. For funds that collect all the capital up front and close off, maybe thats fine. For hedge funds (with a neat sidepocket) or other more open-ended funds it seems like you need multiple graphs based on when invested.
  - smabie 4y ago
    Exactly this: speaking from experience fund returns are highly bespoke and depend on the individual LP. People should be very weary of publicly stated returns, especially for VC funds.
threeseed 4y ago
> looks like a16z will negotiate equity separately with each startup I suspect it won't be a negotiation given the power imbalance. More a case of this is our terms and either you accept or leave.
- deleted 4y ago
  [deleted]
- ramraj07 4y ago
  I guess one can leave then? lol. In this market if they have a single digit cohort size they’re gonna be dealing with really good founders who have other options
- lpolovets 4y ago
  It's still a pretty founder-friendly market. If you get an offer from a16z, or anyone else: 1) it doesn't hurt to negotiate. Worst case they stand firm. 2) if you get a $1m offer from a16z, chances are you will be able to get competitive offers from other firms too. So it's more about whether you like the partner you're talking to, whether you want to work with a16z or another fund, etc (source: I'm a VC)
  - deleted 4y ago
    [deleted]
binarynate 4y ago
Another likely difference: expectations for additional fundraising. Paul Graham has advocated for startups to be "default alive" and YC has stated that they are neutral on whether startups choose to do additional fundraising rounds. In contrast, since a16z is a VC firm that is coming down market (and based on their track record), it seems very likely that they will encourage companies to delay profitability in favor of growth and to raise additional rounds (that a16z will participate in).
- jasfi 4y ago
  Link to Paul Graham's article on default alive or default dead: http://www.paulgraham.com/aord.html http://www.paulgraham.com/aord.html
- shafyy 4y ago
  That's a bunch of BS. Of course YC wants companies to raise additional funding, grow quickly and exit. That's how they make money. They just do it in a less obvious way - but if you watch their videos, read their blog posts etc. - they're all about hypergrowth. I mean, they even have a VC pitch deck template.
  - nithayakumar 4y ago
    Serving VC pitch decks doesn't mean they want want hypergrowth + exits. Having just gone through the W22 batch - it really doesn't feel like they encourage growing quickly and exiting. Hypergrowth is often what founders want. It's validation of product market fit (and of all the efforts).

bspear 4y ago

A16Z's superpower is branding and getting their name out there. Their fund returns are well below Sequoia & co

gojomo 4y ago
Not sure this "well below" knock is true in recent years – what's the best source of data? But even if it was: is a VC's multi-decade record more valuable to a founder than other in-the-now considerations? And, while ideally VCs & founders in the same firm rise with the same tide, cooperatively, synergistically, there can be a margin at which a VC's lower returns could mean higher returns for other owners, like the founders & team.
vmception 4y ago
are fund returns tracked properly... anywhere? My experience with being a limited partner (LP) in ... places... is that each LP experiences wildly different returns based on what deals they are part of. Its not like you invest in these kinds of funds at a certain watermark and hope your investment is at the time where things go up. you have no exposure to prior investments no matter how awesome or poor they were. For funds that collect all the capital up front and close off, maybe thats fine. For hedge funds (with a neat sidepocket) or other more open-ended funds it seems like you need multiple graphs based on when invested.
- smabie 4y ago
  Exactly this: speaking from experience fund returns are highly bespoke and depend on the individual LP. People should be very weary of publicly stated returns, especially for VC funds.

threeseed 4y ago

> looks like a16z will negotiate equity separately with each startup I suspect it won't be a negotiation given the power imbalance. More a case of this is our terms and either you accept or leave.

deleted 4y ago
[deleted]
ramraj07 4y ago
I guess one can leave then? lol. In this market if they have a single digit cohort size they’re gonna be dealing with really good founders who have other options
lpolovets 4y ago
It's still a pretty founder-friendly market. If you get an offer from a16z, or anyone else: 1) it doesn't hurt to negotiate. Worst case they stand firm. 2) if you get a $1m offer from a16z, chances are you will be able to get competitive offers from other firms too. So it's more about whether you like the partner you're talking to, whether you want to work with a16z or another fund, etc (source: I'm a VC)
- deleted 4y ago
  [deleted]

binarynate 4y ago

Another likely difference: expectations for additional fundraising. Paul Graham has advocated for startups to be "default alive" and YC has stated that they are neutral on whether startups choose to do additional fundraising rounds. In contrast, since a16z is a VC firm that is coming down market (and based on their track record), it seems very likely that they will encourage companies to delay profitability in favor of growth and to raise additional rounds (that a16z will participate in).

jasfi 4y ago
Link to Paul Graham's article on default alive or default dead: http://www.paulgraham.com/aord.html http://www.paulgraham.com/aord.html
shafyy 4y ago
That's a bunch of BS. Of course YC wants companies to raise additional funding, grow quickly and exit. That's how they make money. They just do it in a less obvious way - but if you watch their videos, read their blog posts etc. - they're all about hypergrowth. I mean, they even have a VC pitch deck template.
- nithayakumar 4y ago
  Serving VC pitch decks doesn't mean they want want hypergrowth + exits. Having just gone through the W22 batch - it really doesn't feel like they encourage growing quickly and exiting. Hypergrowth is often what founders want. It's validation of product market fit (and of all the efforts).