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Investors haven't stopped investing. In fact the record series A valuation for a YC-funded company was set just a few weeks ago. Even if investors did stop in
by pg 18y ago
Investors haven't stopped investing. In fact the record series A valuation for a YC-funded company was set just a few weeks ago.
Even if investors did stop investing, it wouldn't kill us. At the last Demo Day, 4 of the companies presenting were already profitable. (All 4 have had offers of investment, incidentally.) At the next Demo Day the ratio of profitable companies will be even higher.
As for his alternative suggestion, among other problems, it wouldn't give startups any more runway. There's no reason to suppose that if we got into the real estate business, we could offer space to startups any cheaper than they can get it on the open market.
- johnrob 18y agoI'd say the bigger "risk" for YC is that the competition to get in becomes so fierce that building a profitable company would seem easier by comparison.
- skmurphy 18y agoThis is the "nobody goes there anymore it's too crowded" argument. The more fierce the competition to get in the more likely YC can pick winners. Also, they would get much broader visibility to other startups' plans. Consider the other extreme: fewer applicants than slots they had allocated. Quality and success rates would likely be lower.
- brezina 18y agowow, record series A valuation? Did this company start working on their product near the beginning of their YC funding cycle or had they been working on it for a while? It appears to me that a higher percentage of YC companies are coming into the program with a developed product and traction than we had during the reddit, loopt, kiko days. As an aside, I love the author Jamie Siminoff, I enjoy our product brainstorming sessions, and think his company Phonetag is awesome, but I think this article is a bit empty. I wonder if companies would be as hungry to succeed if they had guaranteed place to stay in a hotel that resembled a 24 hour lan party? Probably not.
- Siminoff 18y agoMatt thanks for the comment and I agree the article is a bit empty, because in reality it was a quick post based on what I have been feeling lately, not so much an article... I should probably write a follow up about how I would envision the "24 hour party". For example for sure you would not be gauranteed to stay, the ability to stay would be based on how the company and team are working. So in essence every week or 2 would be viewed as an additional round. However with this cost basis unlike others you could keep a company going a lot longer if you believed traction would come.
- deleted 18y ago[deleted]
- pg 18y agoIIRC they didn't have too much done yet when YC started. They did have a lot done by the time the A round happened, though, because they'd done an angel round in the interim.
- skmurphy 18y agoCan you explain why a record series A valuation is useful for YC unless they bought you out as they bought in. I would assume it means less dilution of your equity stake but I would think a record exit value (e.g. acquisition) without further funding would be the best argument for your model.
- byrneseyeview 18y agoI wonder if there's some sort of correlation between a huge series A and a nice exit later on. Nahhh.
- skmurphy 18y agoThere is a correlation between a huge series A valuation and down round series B, which tends to be dilutive of the seed and A rounds.
- webwright 18y agoI don't think he was saying that a big Series A was good for YC. He was just offering evidence contrary to the authors point that VCs weren't investing.