3 ms·

I think YC can say/do that, as with the YC stamp of approval you are already on the A-tier track of VCs. So for their portfolio companies having a shoddy produc

I think YC can say/do that, as with the YC stamp of approval you are already on the A-tier track of VCs. So for their portfolio companies having a shoddy product will be the main reason of not getting follow up funding. Meanwhile, if you started out with a "lesser tier" accelerator/incubator, you'll have to prove that you have a good product _plus_ you have to fight an uphill battle and convince A tier VCs to even take a look at you.

jedberg 3y ago
You'd be surprised at how hard it is for YC companies to get follow up investment, even with the YC stamp. I think YC tells that to their startups because they believe it. YC has always been about elevating founders and making "start my own business" a viable alternative to "get a high paying job". And from day one their motto was "make something people want". And when you exit they give you a shirt that says, "I made something people want". They've always been product over everything else.
pcthrowaway 3y ago
Even YC VCs don't understand that founders who take investment still have to shift their goal from "making a great product" to "exponentially growing their product" which in most cases is at odds with just "making a great product" YC doesn't invest in companies who aren't aspiring for valuations in the 8 or 9 figures (even if mid/high 7 figures would still be profitable). In the recent thread "Ask HN: Those making $500/month on side projects in 2024 – Show and tell" a user posted https://convertcase.net https://convertcase.net which is making $20K/month[1]. A traditional VC would never touch that, and if the user had sought VC investment, there would need to be plans for user sign-up, a SaaS dashboard where users can manage their projects and the different kinds of entities they would need to convert, integration with CI.. who knows what else. At that point they'd be building a completely different business, and would no longer be able to build the sustainable version that might not ever get $50,000,000 valuation. And that business would likely require them to hire more people and raise more funding [1]: https://news.ycombinator.com/item?id=39119230 https://news.ycombinator.com/item?id=39119230
- robocat 3y ago
  > YC doesn't invest in companies who aren't aspiring for valuations in the 7 or 8 figures False. YC even has a non-profit track: https://www.ycombinator.com/blog/what-y-combinator-looks-for-in-nonprofits/ https://www.ycombinator.com/blog/what-y-combinator-looks-for... But yes, YC is VC and YC wants to create unicorns and has little interest in small businesses or bootstrapping. Joining YC is giving yourself a median outcome of failure - $0 for your common shares is the expected outcome (albeit likely true for bootstrapping founders too?). VC incentives and rules mean that VC virtually always takes more than 50% ownership over multiple rounds. So even if founders backed a winning business, founders will usually have lost control. VC will often kick founders out (it's allowed in the contracts and is part of the game).
- tptacek 3y ago
  My sense of it is that YC feels its strength is in having and growing a huge luck surface area, because their dollars are worth more to founders so they get to make lots of bets, and they have a systematized process that meets founders where they are and can do a lot with super-motivated teams that want an intensive engagement while not getting in the way of teams that are more fire-and-forget. Which is to say: their investing is interesting but it doesn't have that much to do with long-term investing in startups. If you need plural millions to reach orbit, you're going to need to pitch a 9-figure company, because big-ticket investors have portfolio math that only works for those kinds of companies. So, to me it doesn't make too much sense to talk about what a "traditional" VC will or won't touch. For most YC success stories, both kinds of VC are involved.

jedberg 3y ago

You'd be surprised at how hard it is for YC companies to get follow up investment, even with the YC stamp. I think YC tells that to their startups because they believe it. YC has always been about elevating founders and making "start my own business" a viable alternative to "get a high paying job". And from day one their motto was "make something people want". And when you exit they give you a shirt that says, "I made something people want". They've always been product over everything else.

pcthrowaway 3y ago

Even YC VCs don't understand that founders who take investment still have to shift their goal from "making a great product" to "exponentially growing their product" which in most cases is at odds with just "making a great product" YC doesn't invest in companies who aren't aspiring for valuations in the 8 or 9 figures (even if mid/high 7 figures would still be profitable). In the recent thread "Ask HN: Those making $500/month on side projects in 2024 – Show and tell" a user posted https://convertcase.net https://convertcase.net which is making $20K/month[1]. A traditional VC would never touch that, and if the user had sought VC investment, there would need to be plans for user sign-up, a SaaS dashboard where users can manage their projects and the different kinds of entities they would need to convert, integration with CI.. who knows what else. At that point they'd be building a completely different business, and would no longer be able to build the sustainable version that might not ever get $50,000,000 valuation. And that business would likely require them to hire more people and raise more funding [1]: https://news.ycombinator.com/item?id=39119230 https://news.ycombinator.com/item?id=39119230

robocat 3y ago
> YC doesn't invest in companies who aren't aspiring for valuations in the 7 or 8 figures False. YC even has a non-profit track: https://www.ycombinator.com/blog/what-y-combinator-looks-for-in-nonprofits/ https://www.ycombinator.com/blog/what-y-combinator-looks-for... But yes, YC is VC and YC wants to create unicorns and has little interest in small businesses or bootstrapping. Joining YC is giving yourself a median outcome of failure - $0 for your common shares is the expected outcome (albeit likely true for bootstrapping founders too?). VC incentives and rules mean that VC virtually always takes more than 50% ownership over multiple rounds. So even if founders backed a winning business, founders will usually have lost control. VC will often kick founders out (it's allowed in the contracts and is part of the game).
tptacek 3y ago
My sense of it is that YC feels its strength is in having and growing a huge luck surface area, because their dollars are worth more to founders so they get to make lots of bets, and they have a systematized process that meets founders where they are and can do a lot with super-motivated teams that want an intensive engagement while not getting in the way of teams that are more fire-and-forget. Which is to say: their investing is interesting but it doesn't have that much to do with long-term investing in startups. If you need plural millions to reach orbit, you're going to need to pitch a 9-figure company, because big-ticket investors have portfolio math that only works for those kinds of companies. So, to me it doesn't make too much sense to talk about what a "traditional" VC will or won't touch. For most YC success stories, both kinds of VC are involved.