4 ms·

Yes, but if it's working, why let Sequoia in the deal? YC has an existing brand and deal pipeline... This just doesn't make sense to me. You're also inevitably

by numair 18y ago

Yes, but if it's working, why let Sequoia in the deal? YC has an existing brand and deal pipeline... This just doesn't make sense to me. You're also inevitably leaving other potential follow-on investors, such as Founders Fund, at a disadvantage... This really seems like more of a win for Sequoia (access to deal pipeline, continue to expose itself as the preferred VC of Internet startups, etc) than for YC (get $2m and funnel startups to Sequoia for follow-on financing). I know Paul's a smart guy, so there must be a missing piece somewhere.

shimon 18y ago
How about this: 1. The YC founder-investors probably lost 30% or so of their wealth in the recent stock market decline (maybe they did better, maybe they did worse, but they probably feel poorer). 2. At the same time, YC has continued to improve their deal flow and develop connections in Silicon Valley, so they are turning down better applications than they used to. 3. Other VC firms are continuing to notice YC and compete. If YC can remain the top seed firm because of its founders' fame and network, YC will be poised to dominate seed investment for many years, as lower-tier seed firms spur demand but have their most promising prospects sniped by a YC now able to fund and advise a larger pool of companies. Just like top-tier VCs like Sequoia get access to better companies while lower-tier VCs lose money. Whether it's a good idea really depends on the average quality of the deals YC has been turning down. If YC rejects are increasingly good, expanding the funding pool and accepting more startups makes sense.
abossy 18y ago
> Yes, but if it's working, why let Sequoia in the deal? You are thinking of YC as a for-profit company; don't. Remember, it was conceived as the result of PG's guilt when he advised students to seek out rich hackers for seed money--just not him. Moreover, one of YC's key goals is to give young, bright hackers the freedom to build valuable things without the impediments of bureaucracy. While the expense/revenue/profit structure is necessary for YC to attract talent and thrive, it's otherwise a benevolent venture. PG wants to expand the goodness. The four YC folks can only do so much.
- ErrantX 18y ago
  At the same time it has to be about the money too - otherwise it's a pretty silly venture :) (i.e. it is throwing good money at bad ideas).
pg 18y ago
it's working, why let Sequoia in the deal? Because working is not the same as being liquid.
- numair 18y ago
  Point taken; thanks. As I replied to your reply further up in the thread, I could definitely see how a future Sequoia-YC combination would be beneficial to both parties. I hope this works out well for you, as you're doing a great job of helping a new generation of entrepreneurs.

by numair 18y ago

shimon 18y ago

How about this: 1. The YC founder-investors probably lost 30% or so of their wealth in the recent stock market decline (maybe they did better, maybe they did worse, but they probably feel poorer). 2. At the same time, YC has continued to improve their deal flow and develop connections in Silicon Valley, so they are turning down better applications than they used to. 3. Other VC firms are continuing to notice YC and compete. If YC can remain the top seed firm because of its founders' fame and network, YC will be poised to dominate seed investment for many years, as lower-tier seed firms spur demand but have their most promising prospects sniped by a YC now able to fund and advise a larger pool of companies. Just like top-tier VCs like Sequoia get access to better companies while lower-tier VCs lose money. Whether it's a good idea really depends on the average quality of the deals YC has been turning down. If YC rejects are increasingly good, expanding the funding pool and accepting more startups makes sense.

abossy 18y ago

> Yes, but if it's working, why let Sequoia in the deal? You are thinking of YC as a for-profit company; don't. Remember, it was conceived as the result of PG's guilt when he advised students to seek out rich hackers for seed money--just not him. Moreover, one of YC's key goals is to give young, bright hackers the freedom to build valuable things without the impediments of bureaucracy. While the expense/revenue/profit structure is necessary for YC to attract talent and thrive, it's otherwise a benevolent venture. PG wants to expand the goodness. The four YC folks can only do so much.

ErrantX 18y ago
At the same time it has to be about the money too - otherwise it's a pretty silly venture :) (i.e. it is throwing good money at bad ideas).

pg 18y ago

it's working, why let Sequoia in the deal? Because working is not the same as being liquid.

numair 18y ago
Point taken; thanks. As I replied to your reply further up in the thread, I could definitely see how a future Sequoia-YC combination would be beneficial to both parties. I hope this works out well for you, as you're doing a great job of helping a new generation of entrepreneurs.