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I'm no expert on this stuff, but it seems like 10x improvement in terms for the Angel route is abusing some New Math. If a two person team goes with YC, and YC
by Xichekolas 17y ago
I'm no expert on this stuff, but it seems like 10x improvement in terms for the Angel route is abusing some New Math.
If a two person team goes with YC, and YC gets 6%, then the founders have 94% of the equity and $15k. If they go with the hypothetical Angel, who takes 2.4%, then they end up with 97.6% of the company and $50k.
So yes, they end up with 3.3x the cash in hand, but only 3.8% more equity (97.6/94). And it doesn't seem to make sense to multiply those numbers to reach some good-for-headlines number like 10x. Not to mention the stated goal of YC has been "seed stage", which is presumably before, and not exclusive of, "angel stage".
- nolanbrown23 17y agoDoesn't YC require an option pool for employees, something along the lines of 15%? If so then the founders only own 79% of the company.
- wheels 17y agoWell, options are granted at the discretion of the board and YC doesn't take a board seat. Most companies will incorporate leaving some percentage of their stock unallocated. Founders only "lose" that percentage of their voting rights when they grant options to later people joining the company, which they'd probably do anyway.