9 ms·

This is intersting. Occasionally in YC founder circles a new founder will raise a bunch of money and then ask something like "What's the best way to invest all

by cj 9mo ago

This is intersting. Occasionally in YC founder circles a new founder will raise a bunch of money and then ask something like "What's the best way to invest all the money our company just raised?" The responses are always along the lines of "Your startup is already risky. Don't innovate in areas of your business where the status quo is known to work. Innovate your product + technology, don't be innovative with your company's finances, HR, etc" That advice always stuck with me. It just makes a lot of sense to do things in the most boring way possible, except where it matters (your competitive advantage <-- that's where you innovate, that's where you set yourself apart) Running a startup is distracting enough. Doing things non-standard just adds to the list of distractions that you don't need as a founder.

deleted 9mo ago
[deleted]
polishdude20 9mo ago
Then again, to play devils advocate, doing all the other stuff in a new way might also help your company break out of the cycle that typically impacts startups. It may be that the other things you do apart from your product are what make it successful.
- HaZeust 9mo ago
  You've taken VC money at that point. Hate to say it, but doing that means you're voluntarily going into the cycle with no intent to break it.
- dannyw 9mo ago
  Figuring out a better way to ~~invest~~ speculate with your company's balance sheet is seriously unlikely to improve the trajectory of your company.
  - deleted 9mo ago
    [deleted]
  - stackghost 9mo ago
    I mean if you have a significant chunk of free cash sitting around there's almost no reason not to put a portion of it in 3-6 month Treasuries or something. The return won't be much but it's better than letting the cash sit idle and evaporate due to inflation
    - NickC25 9mo ago
      Uh, that's not "better". If you have a huge chunk of change sitting around, you've raised too much or too early, and you've successfully diluted yourself for zero reason. If you actually had a reason to raise a lot of money, you'd do with the money what you promised the investors (who gave you the money) you would. I've raised before. I raised what I needed. Not a penny more because I didn't need the money.
      - stackghost 9mo ago
        I too have raised before. I'm not saying raising and then buying T-Bills is better than just raising less. I'm saying if you find yourself with excess cash, you can't just un-raise. In that scenario, then short term T Bills are strictly better than cash.
        hollerith 9mo ago
        >if you find yourself with excess cash, you can't just un-raise I always thought a startup can return cash to investors as long as the payments or dispersements are proportional to the amount of stock owned.
        stackghost 9mo ago
        Depends on the funding vehicle. If you're on a SAFE, and still a going concern, then I think returning investor funds would trigger a priced round and you'd end up converting at a (hopefully) high valuation
        NickC25 9mo ago
        The question is why you'd use money you raised for anything but the reason you raised it. You've probably raised a shit ton more than I have, but hear me out - when one raises, there's generally a timeline of fund deployment from the startup's UoF, right? That's how it was done in my case - we tell the investor what we need, why we need it, and when we need it, etc. And then if the investor agrees to invest, it's not just a lump sum sitting in the bank - a good amount of that money gets deployed to help the startup fulfill its mission. I get that if you're running super lean and you've raised enough to run lean for a while and use cash when you need to, but at the same time why raise more than you have need for?
  - debo_ 9mo ago
    MicroStrategy?
    - wmf 9mo ago
      It's about to collapse for the second time.
- UqWBcuFx6NV4r 9mo ago
  This comment really shows how far the SV VC culture still is from running profitable businesses with solid fundamentals. No surprise that I am hearing this on the same website where people come to act like hard-done-by factory workers whenever [incredibly bloated and dysfunctional FAANG] lays people off after facing the real-world financial realities. For the love of God, no. Do not do that. The cycle begins when you take the money. How there are still people here that don’t get this, I don’t understand.
  - raw_anon_1111 9mo ago
    The purpose of VC’s were never to fund companies until they become profitable, it’s the find the “bigger fool”. Occasionally it’s the public market… https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-combinator-companies-a-mixed-bag-of-success-and-struggle-58e9a4006f01 https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-... Most often for successful exits, it’s to get acquired and shut down the original product with a “Our Amazing Journey” blog post.
    - no_wizard 9mo ago
      That chart is telling about the durability of this business, but do we actually know the precise point at which YCombinator as an entity sold out? For instance, I know Coinbase may be down -22% from the IPO price, but that doesn't mean YCombinator lost money nor made very little. If they, for instance, sold off during the first few days of the IPO they would have made out quite well. There's also the whole question of how much money did YCombinator put in vs what they got out. Without knowing this, about all the chart tells me is YCombinator is not a predicated on building exceedingly durable businesses, but it doesn't mean they lost money on any of these investments either.
      - raw_anon_1111 9mo ago
        YC isn’t the “bigger fool”, their business model is great for them. Of course they made money at IPO. They don’t care about durable businesses. More than likely they sold at IPO.
- Devasta 9mo ago
  Not once in mankind's history has any great product or feat been enhanced or achieved through the use of timesheets. Don't get bogged down with that stuff.
- bandrami 8mo ago
  "A marathon sounds like a really long way to run. Maybe if I simultaneously juggle it will distract me from how tired I am."
smallmancontrov 9mo ago
Yeah but after a series of Big Prints we finally managed to make an inflation spike, a run on Silicon Valley Bank, the US President openly contemplating dollar devaluation, "Sell America trade" working for the first time in 50 years, the marginal buyer of treasuries eliminating the last dove on the path to war, and precious metals whipping around like meme stocks. "Park the money in a USD money market at SVB" used to be not just OK, but universally agreed to be obviously OK, which had value of its own. Now it's just OK. Probably. I hope. Will we see some pivots into bullshit crypto holding companies? Sure, but VC returns are notoriously lottery-ticket distributed and 0 is 0 however you get there. I'd hazard a bet that the number of otherwise-successful companies who die due to this policy rounds to 0, while the probability of an inflationary wrecking ball that wipes out an entire batch of otherwise promising startups in the absence of such a policy is... north of zero. To be clear, I don't think this is due to a special property of crypto, just the flexibility to get away from USD in case of emergency. EDIT: maybe 24/7 trading could be an argument. It would be a meme for the ages if a raft of startups survived because they were up hustling and grinding at 2AM when the boats hit the Taiwan Strait.
- cj 9mo ago
  You’re describing an event that would wipe out the US economy and trying to protect against that with stable coins, or at least that’s the impression I’m getting. If the US falls apart, your startup will too. No matter how well preserved your cash reserves are. The US going to war or entering hyperinflation is probably at the bottom of most founders lists of existential worries. Not a risk to mitigate (it’s a risk you need to accept since there’s nothing you can do - worrying about it won’t help) Also, worth mentioning that no one lost money with SVB’s collapse. One might argue it was an incredibly smart decision for YC to recommend people bank at SVB since if SVB goes under, virtually all LP’s and everyone in the VC community will go under too (too big to fail, so they won’t, or if they do, everyone else fails too — kind of like AWS us-east-1)
  - j45 9mo ago
    No one might have lost their money with the collapse of the banks but with the large amount of new money printed, the value of each dollar will continue to erode. Inflation and hyper-inflation can wipe out debts with future money that's cheaper more easily in some ways. I forget where I had read or learned more about this in other countries that had experienced it.
Aurornis 9mo ago
YC, like most incubators, has always encouraged their companies to use products and services from other companies in their portfolio. The simplest explanation is that this is a mostly symbolic move: They want to show that the stable coin and crypto companies they invest in are actually trusted by YC. It starts to look hypocritical if an investor is funding crypto companies and praising them as important breakthroughs, but not actually using them where it’s important.
- 7e 9mo ago
  But what advantages do stablecoins have?
  - toomim 9mo ago
    Faster and cheaper transactions that don't get locked up by the whims of a bureaucracy. They continue to operate on non-business days.
    - irishcoffee 9mo ago
      At the end of the day, for better or worse, the US dollar is backed by the US military. Virtual coins are backed by the greater fool. What a strange toss-up.
      - Onavo 9mo ago
        But the stable coins are also backed by the US military. All major USD stablecoins have sanctions mechanisms baked into their smart contract. See for yourself the blacklist features https://github.com/circlefin/stablecoin-evm/tree/master/scripts/hardhat https://github.com/circlefin/stablecoin-evm/tree/master/scri...
      - anukin 9mo ago
        Usdc is backed by US dollar denominated treasuries for most major issuers.
dboon 9mo ago
I like your writing. Do you have a blog or publish anywhere else?
- airstrike 9mo ago
  I second this motion
  - aswegs8 8mo ago
    I third this motion
BLKNSLVR 9mo ago
It does seem ironic that a startup would immediately pivot to devoting some of its precious time and attention to becoming a hedge fund just as they've got the funding for their 'startup idea'. On the other hand, any big whack of cash should have an optimisation plan, lest it be wasted. Does YC provide templates? Oversimplifying: X = full amount of raised capital Y = expected spend over 12 months Z = $ value of percentage contingency for 12 months Y+Z goes into use-it-however-and-whenever-you-want account (likely low to no interest) X - (Y+Z) goes into a 12 month higher interest account, ideally staying untouched until maturity (stake the stablecoins in this context) I'm skeptical of crpyto holding companies though, explicitly because of the lack of regulation. The likes of BlockFi, Celsius, and FTX gives me the cold sweats. Regulation in the US is notoriously lacking even in well established finance and banking, never mind the crypto 'industry' which was always high-percentage grifters, and now the Epstein files has added 'morally corrupt' tags to more of them. Recipe for sleepless nights, which is already a problem for a startup founders isn't it?
- wmf 9mo ago
  Just a money market account or something (e.g. https://mercury.com/treasury https://mercury.com/treasury ). Also X=Y for almost all startups.
  - fakedang 8mo ago
    The point is, treasury accounts are not designed to manage crypto. So that's another layer of money management that startups have to deal with, when they could simply ignore it using a treasury account. But of course, YC being YC will fund another startup which will help other startups manage their stablecoin portfolios... Also note that in most jurisdictions, you cannot pay employees with crypto, stable coins or not. Nor can you pay suppliers. Or AWS/GCP/Azure. This is literally a textbook example of, in YC's words, a solution in search of a problem.
- blitzar 8mo ago
  Is there no treasury desk at YC that takes care of this for everyone?! Seems sub optimal to drop millions into a founders bank account for couple of years runway.
factorialboy 8mo ago
Relevant question: How many YCombinator portfolio companies issue stable coins. Stablecoin-adjacent YC companies: • Bridge (acquired by Stripe for $1.1B) — stablecoin infrastructure, now offers "Open Issuance" platform for others to launch stablecoins • PrimeVault (S2022) — helps enterprises issue & manage digital assets/stablecoins • BlindPay (W2025) — stablecoin API for payments • Coinbase (S2012) — issues USDC (with Circle)
blitzar 8mo ago
> What's the best way to invest all the money our company just raised? You should invest in some YC startups with your YC investment money.
morpheuskafka 8mo ago
I agree, if you just want to not "waste" the cash while it's sitting, keep it very simple with something like T bills or, if you don't need it immediately, maybe a total market fund. This also makes sense from the investors point of view, they invested in your company to receive growth from your product/business, not from random stocks you bought with it. That said, I think there is a distinction between trying to be innovative across the company (ex. Gitlab's open employee handbook, CEO shadows, etc.) which is arguably not a bad thing at all, and this specific case of trying to actively invest company funds. In some cases, a more innovative way of doing things may actually be simpler and less complex than the default way for bigger companies, it just depends on the exact scenario.
- robinhouston 8mo ago
  > if you don't need it immediately, maybe a total market fund That strikes me as unwise. If there’s a sharp downturn in the total market, that’s precisely when you might need to call upon otherwise unneeded cash reserves.
  - duxup 8mo ago
    Agreed. I would think placing it in something more conservative would be a better choice. Presumably the company will want those funds available.
sharperguy 8mo ago
Not all stablecoins are intended as investments. For many it's just a way to send money internationally without dealing with the SWIFT system, waiting periods, banks losing payments etc.

by cj 9mo ago

deleted 9mo ago

[deleted]

polishdude20 9mo ago

Then again, to play devils advocate, doing all the other stuff in a new way might also help your company break out of the cycle that typically impacts startups. It may be that the other things you do apart from your product are what make it successful.

HaZeust 9mo ago
You've taken VC money at that point. Hate to say it, but doing that means you're voluntarily going into the cycle with no intent to break it.
dannyw 9mo ago
Figuring out a better way to ~~invest~~ speculate with your company's balance sheet is seriously unlikely to improve the trajectory of your company.
- deleted 9mo ago
  [deleted]
- stackghost 9mo ago
  I mean if you have a significant chunk of free cash sitting around there's almost no reason not to put a portion of it in 3-6 month Treasuries or something. The return won't be much but it's better than letting the cash sit idle and evaporate due to inflation
  - NickC25 9mo ago
    Uh, that's not "better". If you have a huge chunk of change sitting around, you've raised too much or too early, and you've successfully diluted yourself for zero reason. If you actually had a reason to raise a lot of money, you'd do with the money what you promised the investors (who gave you the money) you would. I've raised before. I raised what I needed. Not a penny more because I didn't need the money.
    - stackghost 9mo ago
      I too have raised before. I'm not saying raising and then buying T-Bills is better than just raising less. I'm saying if you find yourself with excess cash, you can't just un-raise. In that scenario, then short term T Bills are strictly better than cash.
      - hollerith 9mo ago
        >if you find yourself with excess cash, you can't just un-raise I always thought a startup can return cash to investors as long as the payments or dispersements are proportional to the amount of stock owned.
        stackghost 9mo ago
        Depends on the funding vehicle. If you're on a SAFE, and still a going concern, then I think returning investor funds would trigger a priced round and you'd end up converting at a (hopefully) high valuation
      - NickC25 9mo ago
        The question is why you'd use money you raised for anything but the reason you raised it. You've probably raised a shit ton more than I have, but hear me out - when one raises, there's generally a timeline of fund deployment from the startup's UoF, right? That's how it was done in my case - we tell the investor what we need, why we need it, and when we need it, etc. And then if the investor agrees to invest, it's not just a lump sum sitting in the bank - a good amount of that money gets deployed to help the startup fulfill its mission. I get that if you're running super lean and you've raised enough to run lean for a while and use cash when you need to, but at the same time why raise more than you have need for?
- debo_ 9mo ago
  MicroStrategy?
  - wmf 9mo ago
    It's about to collapse for the second time.
UqWBcuFx6NV4r 9mo ago
This comment really shows how far the SV VC culture still is from running profitable businesses with solid fundamentals. No surprise that I am hearing this on the same website where people come to act like hard-done-by factory workers whenever [incredibly bloated and dysfunctional FAANG] lays people off after facing the real-world financial realities. For the love of God, no. Do not do that. The cycle begins when you take the money. How there are still people here that don’t get this, I don’t understand.
- raw_anon_1111 9mo ago
  The purpose of VC’s were never to fund companies until they become profitable, it’s the find the “bigger fool”. Occasionally it’s the public market… https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-combinator-companies-a-mixed-bag-of-success-and-struggle-58e9a4006f01 https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-... Most often for successful exits, it’s to get acquired and shut down the original product with a “Our Amazing Journey” blog post.
  - no_wizard 9mo ago
    That chart is telling about the durability of this business, but do we actually know the precise point at which YCombinator as an entity sold out? For instance, I know Coinbase may be down -22% from the IPO price, but that doesn't mean YCombinator lost money nor made very little. If they, for instance, sold off during the first few days of the IPO they would have made out quite well. There's also the whole question of how much money did YCombinator put in vs what they got out. Without knowing this, about all the chart tells me is YCombinator is not a predicated on building exceedingly durable businesses, but it doesn't mean they lost money on any of these investments either.
    - raw_anon_1111 9mo ago
      YC isn’t the “bigger fool”, their business model is great for them. Of course they made money at IPO. They don’t care about durable businesses. More than likely they sold at IPO.
Devasta 9mo ago
Not once in mankind's history has any great product or feat been enhanced or achieved through the use of timesheets. Don't get bogged down with that stuff.
bandrami 8mo ago
"A marathon sounds like a really long way to run. Maybe if I simultaneously juggle it will distract me from how tired I am."

smallmancontrov 9mo ago

Yeah but after a series of Big Prints we finally managed to make an inflation spike, a run on Silicon Valley Bank, the US President openly contemplating dollar devaluation, "Sell America trade" working for the first time in 50 years, the marginal buyer of treasuries eliminating the last dove on the path to war, and precious metals whipping around like meme stocks. "Park the money in a USD money market at SVB" used to be not just OK, but universally agreed to be obviously OK, which had value of its own. Now it's just OK. Probably. I hope. Will we see some pivots into bullshit crypto holding companies? Sure, but VC returns are notoriously lottery-ticket distributed and 0 is 0 however you get there. I'd hazard a bet that the number of otherwise-successful companies who die due to this policy rounds to 0, while the probability of an inflationary wrecking ball that wipes out an entire batch of otherwise promising startups in the absence of such a policy is... north of zero. To be clear, I don't think this is due to a special property of crypto, just the flexibility to get away from USD in case of emergency. EDIT: maybe 24/7 trading could be an argument. It would be a meme for the ages if a raft of startups survived because they were up hustling and grinding at 2AM when the boats hit the Taiwan Strait.

cj 9mo ago
You’re describing an event that would wipe out the US economy and trying to protect against that with stable coins, or at least that’s the impression I’m getting. If the US falls apart, your startup will too. No matter how well preserved your cash reserves are. The US going to war or entering hyperinflation is probably at the bottom of most founders lists of existential worries. Not a risk to mitigate (it’s a risk you need to accept since there’s nothing you can do - worrying about it won’t help) Also, worth mentioning that no one lost money with SVB’s collapse. One might argue it was an incredibly smart decision for YC to recommend people bank at SVB since if SVB goes under, virtually all LP’s and everyone in the VC community will go under too (too big to fail, so they won’t, or if they do, everyone else fails too — kind of like AWS us-east-1)
- j45 9mo ago
  No one might have lost their money with the collapse of the banks but with the large amount of new money printed, the value of each dollar will continue to erode. Inflation and hyper-inflation can wipe out debts with future money that's cheaper more easily in some ways. I forget where I had read or learned more about this in other countries that had experienced it.

Aurornis 9mo ago

YC, like most incubators, has always encouraged their companies to use products and services from other companies in their portfolio. The simplest explanation is that this is a mostly symbolic move: They want to show that the stable coin and crypto companies they invest in are actually trusted by YC. It starts to look hypocritical if an investor is funding crypto companies and praising them as important breakthroughs, but not actually using them where it’s important.

7e 9mo ago
But what advantages do stablecoins have?
- toomim 9mo ago
  Faster and cheaper transactions that don't get locked up by the whims of a bureaucracy. They continue to operate on non-business days.
  - irishcoffee 9mo ago
    At the end of the day, for better or worse, the US dollar is backed by the US military. Virtual coins are backed by the greater fool. What a strange toss-up.
    - Onavo 9mo ago
      But the stable coins are also backed by the US military. All major USD stablecoins have sanctions mechanisms baked into their smart contract. See for yourself the blacklist features https://github.com/circlefin/stablecoin-evm/tree/master/scripts/hardhat https://github.com/circlefin/stablecoin-evm/tree/master/scri...
    - anukin 9mo ago
      Usdc is backed by US dollar denominated treasuries for most major issuers.

dboon 9mo ago

I like your writing. Do you have a blog or publish anywhere else?

airstrike 9mo ago
I second this motion
- aswegs8 8mo ago
  I third this motion

BLKNSLVR 9mo ago

It does seem ironic that a startup would immediately pivot to devoting some of its precious time and attention to becoming a hedge fund just as they've got the funding for their 'startup idea'. On the other hand, any big whack of cash should have an optimisation plan, lest it be wasted. Does YC provide templates? Oversimplifying: X = full amount of raised capital Y = expected spend over 12 months Z = $ value of percentage contingency for 12 months Y+Z goes into use-it-however-and-whenever-you-want account (likely low to no interest) X - (Y+Z) goes into a 12 month higher interest account, ideally staying untouched until maturity (stake the stablecoins in this context) I'm skeptical of crpyto holding companies though, explicitly because of the lack of regulation. The likes of BlockFi, Celsius, and FTX gives me the cold sweats. Regulation in the US is notoriously lacking even in well established finance and banking, never mind the crypto 'industry' which was always high-percentage grifters, and now the Epstein files has added 'morally corrupt' tags to more of them. Recipe for sleepless nights, which is already a problem for a startup founders isn't it?

wmf 9mo ago
Just a money market account or something (e.g. https://mercury.com/treasury https://mercury.com/treasury ). Also X=Y for almost all startups.
- fakedang 8mo ago
  The point is, treasury accounts are not designed to manage crypto. So that's another layer of money management that startups have to deal with, when they could simply ignore it using a treasury account. But of course, YC being YC will fund another startup which will help other startups manage their stablecoin portfolios... Also note that in most jurisdictions, you cannot pay employees with crypto, stable coins or not. Nor can you pay suppliers. Or AWS/GCP/Azure. This is literally a textbook example of, in YC's words, a solution in search of a problem.
blitzar 8mo ago
Is there no treasury desk at YC that takes care of this for everyone?! Seems sub optimal to drop millions into a founders bank account for couple of years runway.

factorialboy 8mo ago

Relevant question: How many YCombinator portfolio companies issue stable coins. Stablecoin-adjacent YC companies: • Bridge (acquired by Stripe for $1.1B) — stablecoin infrastructure, now offers "Open Issuance" platform for others to launch stablecoins • PrimeVault (S2022) — helps enterprises issue & manage digital assets/stablecoins • BlindPay (W2025) — stablecoin API for payments • Coinbase (S2012) — issues USDC (with Circle)

blitzar 8mo ago

> What's the best way to invest all the money our company just raised? You should invest in some YC startups with your YC investment money.

morpheuskafka 8mo ago

I agree, if you just want to not "waste" the cash while it's sitting, keep it very simple with something like T bills or, if you don't need it immediately, maybe a total market fund. This also makes sense from the investors point of view, they invested in your company to receive growth from your product/business, not from random stocks you bought with it. That said, I think there is a distinction between trying to be innovative across the company (ex. Gitlab's open employee handbook, CEO shadows, etc.) which is arguably not a bad thing at all, and this specific case of trying to actively invest company funds. In some cases, a more innovative way of doing things may actually be simpler and less complex than the default way for bigger companies, it just depends on the exact scenario.

robinhouston 8mo ago
> if you don't need it immediately, maybe a total market fund That strikes me as unwise. If there’s a sharp downturn in the total market, that’s precisely when you might need to call upon otherwise unneeded cash reserves.
- duxup 8mo ago
  Agreed. I would think placing it in something more conservative would be a better choice. Presumably the company will want those funds available.

sharperguy 8mo ago

Not all stablecoins are intended as investments. For many it's just a way to send money internationally without dealing with the SWIFT system, waiting periods, banks losing payments etc.