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And a startup doesn't need to make 1 billion per year to be a success. How about one that makes 100 million? or even 10 million? If the company is sold, the fou

And a startup doesn't need to make 1 billion per year to be a success. How about one that makes 100 million? or even 10 million? If the company is sold, the founders will be rich (not ultra rich, but have a million or more). And, for ycombinator, the number of "startup exits" is: 351 (according to this page: https://explodingtopics.com/blog/startup-stats https://explodingtopics.com/blog/startup-stats). Am no expert at startups, but this may mean that out of the 4000 that when through ycombinator, ~9% where valuable enough for investors to take profit. That sound pretty good to me.

robocat 2y ago
> or even 10 million > the founders will be rich A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.
- computerdork 2y ago
  Ah, I see. And actually, I do know a little about startups (even though I said I'm no expert), and thought that most founders who sell their businesses for something like 10 million can make a comfortable amount of cash. But didn't realize that if they use VC's, the VC's can take so much! So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money? (Talking about the minimum needed to make a million for a couple of founders).
  - bruce511 2y ago
    I guess the break-even line is exiting for more than you raised. If you raise 20 mil, and sold for 20 that's different to raising 5 and selling for 10. Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round. Until you can't raise anymore, at which point the exit is likely underwater. But you got paid a salary along the way, so thats not to be ignored.
    - robocat 2y ago
      Often founders don't get to choose when to sell. e.g.: Investors usually get vetos over certain big decisions, like selling the company, regardless of how many board seats they have. And investors can force-feed money that founders don't want for a variety of reasons. Read articles by: https://siliconhillslawyer.com https://siliconhillslawyer.com
      - computerdork 2y ago
        Ah, can see that investors can force the company to shoot for the moon, instead of just trying to right-size the business and sell it. Very interesting!
        robocat 2y ago
        Yeah: VC incentives do not match with founders incentives - share classes are just one obvious signal of that. Good article on that conflict: https://siliconhillslawyer.com/2019/02/18/relationships-and-power-startup-ecosystems/ https://siliconhillslawyer.com/2019/02/18/relationships-and-... > ~9% where valuable enough for investors to take profit Or aquihired. Best analysis I have seen of YC: https://jaredheyman.medium.com/on-the-life-and-death-of-y-combinator-startups-d58aa03421f0 https://jaredheyman.medium.com/on-the-life-and-death-of-y-co... Disappointingly YC hasn't provided any good analysis for founders or employees. YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align). I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options. Finding good information is difficult and YC don't help.
    - computerdork 2y ago
      Good to know, thanks for the info!
cpill 2y ago
I imagine it's not much fun with YC on you constantly telling you to make more, scale, or pivot to you make our investment worth it. I find the clients that pay the least demand the most
- computerdork 2y ago
  agreed:) But on the flip side, as long as the startup is sold in the end and you as the founder make a good amount of money (meaning over a few hundred of thousands), think it's probably worth it

robocat 2y ago

> or even 10 million > the founders will be rich A common misconception that is usually untrue. If you hop on the VC train there are many reasons why founders can get $0. VC gets preferential shares which means that founders (common shares) often get nothing even though the business sold for millions.

computerdork 2y ago
Ah, I see. And actually, I do know a little about startups (even though I said I'm no expert), and thought that most founders who sell their businesses for something like 10 million can make a comfortable amount of cash. But didn't realize that if they use VC's, the VC's can take so much! So, was wondering, would you happen to know if there is a standard amount in a sale of a startup funded by a VC that makes the founders a good amount of money? (Talking about the minimum needed to make a million for a couple of founders).
- bruce511 2y ago
  I guess the break-even line is exiting for more than you raised. If you raise 20 mil, and sold for 20 that's different to raising 5 and selling for 10. Thing is though, the latter scenario isn't common. If you raised 5, and are offered 10, you probably won't accept. You'll go raise another round. Until you can't raise anymore, at which point the exit is likely underwater. But you got paid a salary along the way, so thats not to be ignored.
  - robocat 2y ago
    Often founders don't get to choose when to sell. e.g.: Investors usually get vetos over certain big decisions, like selling the company, regardless of how many board seats they have. And investors can force-feed money that founders don't want for a variety of reasons. Read articles by: https://siliconhillslawyer.com https://siliconhillslawyer.com
    - computerdork 2y ago
      Ah, can see that investors can force the company to shoot for the moon, instead of just trying to right-size the business and sell it. Very interesting!
      - robocat 2y ago
        Yeah: VC incentives do not match with founders incentives - share classes are just one obvious signal of that. Good article on that conflict: https://siliconhillslawyer.com/2019/02/18/relationships-and-power-startup-ecosystems/ https://siliconhillslawyer.com/2019/02/18/relationships-and-... > ~9% where valuable enough for investors to take profit Or aquihired. Best analysis I have seen of YC: https://jaredheyman.medium.com/on-the-life-and-death-of-y-combinator-startups-d58aa03421f0 https://jaredheyman.medium.com/on-the-life-and-death-of-y-co... Disappointingly YC hasn't provided any good analysis for founders or employees. YC doesn't try to align founders and investors incentives - Paul mostly reads like a Venture Capitalist to me (sell founders of their good intentions but don't actually structure incentives to align). I actually think that YC is a great deal but startups are naturally a frog and scorpion system. It is hard to find better options. Finding good information is difficult and YC don't help.
  - computerdork 2y ago
    Good to know, thanks for the info!

cpill 2y ago

I imagine it's not much fun with YC on you constantly telling you to make more, scale, or pivot to you make our investment worth it. I find the clients that pay the least demand the most

computerdork 2y ago
agreed:) But on the flip side, as long as the startup is sold in the end and you as the founder make a good amount of money (meaning over a few hundred of thousands), think it's probably worth it