4 ms·

Definitely true--if someone invests a lot of their money, they'll focus. The problem comes when a 500MM fund makes a 100k investment. YC is somewhat different

by sama 13y ago

Definitely true--if someone invests a lot of their money, they'll focus. The problem comes when a 500MM fund makes a 100k investment. YC is somewhat different, since all the investments we make are the same size. And, I'm biased, but I think we work pretty hard.

cperciva 13y ago
The problem comes when a 500MM fund makes a 100k investment. Right, so the problem isn't party rounds, so much as people not taking advantage of the fact that doing a party round allows them to go after smaller investors. I think we work pretty hard. Having never been through YC I have no direct evidence, but all the indirect evidence points in this direction, yes. ;-)
johnrob 13y ago
YC has to work hard in order to justify the low valuation (or large equity stake, whichever definition you prefer). In that sense you can't really compare YC with normal investors.
asanwal 13y ago
"The problem comes when a 500MM fund makes a 100k investment." Interestingly, after crunching the data, this is not true. In reality, companies who receive money from a larger, multi-stage fund actually raise follow-on financing at a higher rate than those that raise only from dedicated Seed VC firms who presumably care more as they're more invested (or that's what they'd like you to believe :) While Chris Dixon (prior to joining Andreessen Horowitz) and others have championed the idea that large funds don't care and are just investing in seed rounds as a call option for future rounds, the data just doesn't support this contention. We were as surprised as everyone else when we found this. Full research brief we published on this here - http://www.cbinsights.com/blog/trends/seed-venture-capital-funds http://www.cbinsights.com/blog/trends/seed-venture-capital-f... Disclosure: I'm co-founder of the firm, CB Insights, that put this research together. We sell data to VCs, LPs, etc.

by sama 13y ago

cperciva 13y ago

The problem comes when a 500MM fund makes a 100k investment. Right, so the problem isn't party rounds, so much as people not taking advantage of the fact that doing a party round allows them to go after smaller investors. I think we work pretty hard. Having never been through YC I have no direct evidence, but all the indirect evidence points in this direction, yes. ;-)

johnrob 13y ago

YC has to work hard in order to justify the low valuation (or large equity stake, whichever definition you prefer). In that sense you can't really compare YC with normal investors.

asanwal 13y ago

"The problem comes when a 500MM fund makes a 100k investment." Interestingly, after crunching the data, this is not true. In reality, companies who receive money from a larger, multi-stage fund actually raise follow-on financing at a higher rate than those that raise only from dedicated Seed VC firms who presumably care more as they're more invested (or that's what they'd like you to believe :) While Chris Dixon (prior to joining Andreessen Horowitz) and others have championed the idea that large funds don't care and are just investing in seed rounds as a call option for future rounds, the data just doesn't support this contention. We were as surprised as everyone else when we found this. Full research brief we published on this here - http://www.cbinsights.com/blog/trends/seed-venture-capital-funds http://www.cbinsights.com/blog/trends/seed-venture-capital-f... Disclosure: I'm co-founder of the firm, CB Insights, that put this research together. We sell data to VCs, LPs, etc.