5 ms·

I was curious how this compares to doing YC. YC usually asks for 7%, in return for which groups get in the average case $18k. Every startup also gets an $80k n

by pg 13y ago

I was curious how this compares to doing YC. YC usually asks for 7%, in return for which groups get in the average case $18k. Every startup also gets an $80k note that converts in the next equity round. In the last batch the median startup raised $795k after Demo Day. We'll conservatively assume a $5m valuation cap, and (very) conservatively assume the next round valuation (when the $80k note converts) is also $5m. So if you can get into YC, in the average case you'll end up afterward having sold 22% of the company for $813k. We do a lot more than help people raise money, of course, but financially that is what the median trajectory looks like.

casca 13y ago
A significant difference is that a major part of the value of getting into YC is having successfully completed the selection process. There's a reason that when hiring and looking for funding, companies will usually include the year they went into YC. Given the value of the brand, it's likely that YC could offer less for more equity and still be oversubscribed.
- pa5tabear 13y ago
  Did you realize you're replying to Paul Graham? I thought it pretty funny telling pg about his program. Of course I understand there are many more readers of the comment, but it still seems directed at him.
  - lifeisstillgood 13y ago
    Honestly I cannot see casca's comment as trying to tell pg something about YC, more that casca is emphasising that YC is not exploiting its brand value; so a direct comparison (15% for 150K vs 22% for ~800K) could be seen either as pg does - "hey we are waaaaay better value", or as casca says "hey you are toooo cheap" Anecdotally Henry Ford was told that the drive shafts in Model T's were outlasting the chassis, so should they improve the chassis to match? Hell no, drop the quality of the drive shaft and save some money. I think pg would have made a bad Henry Ford. Edit: there is however a clear need for fast, time boxed, fund raising. Kima is part of the YC-inspired move in that direction, and there is far far more talent and money out there than YC can handle, so there is scope for them. They are just pricing in the middle market, away from the luxury brands :-)
    - will_brown 13y ago
      Henry Ford was cost conscious but not for the reasons one might think. Ford was once sued by his Shareholders because he was purposely selling his cars at a loss to the company. The Michigan Supreme Court held that Henry Ford owed a duty to the shareholders of the Ford Motor Company to operate his business to profit his shareholders, rather than the community as a whole or employees. http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company While shareholders were worried about maximizing profits and dividends, Ford was thinking of bettering the World with $60M in capital surplus. Ford envisioned a World where every family could afford and benefit from a vehicle - he just intended to see to it they owned a Ford which simultaneously would have allowed him to employ more workers.
      - lifeisstillgood 13y ago
        I think aggressively pursuing market share through subsidised products hardly counts as Nobel Peace Prize material. Bill Gates would not have needed to do all that exhausting philanthropy now...
        derefr 13y ago
        I don't know... replace "car" with "water filter" and "America" with "Africa", and I think you might be able to see Ford's point of view.
        lifeisstillgood 13y ago
        I would love to see a Nairobi business woman become the next African billionaire selling water filters, mosquito nets and led lights to the whole continent, making a fortune and saving lives. but I won't call her a philanthropist when she is picking out her next yacht. I will be pleased she lived however.
  - deleted 13y ago
    [deleted]
  - clarky07 13y ago
    He's just commenting on it, and it's a reasonable comment at that. It's not like he's telling pg how to run his business.
salimmadjd 13y ago
Useful data, PG! I agree the value of YC is far higher than Kima15. But given the level of competition to get into YC, I would say you have lower risk profile than Kima15. I think they probably fit a nice spot for founders who can't get to YC but are looking for funding. Overall it's win for founders.
jber 13y ago
Hello Paul Great numbers, we really admire a lot what you're doing at YC but not all companies want to join an accelerator or relocate and not all companies are accepted by YC ;-) We see Kima15 as a different offer for different founders all over the world who want to raise funding quickly and when they need it.
- skrebbel 13y ago
  Wow, cool that you also read Hacker News. If you don't mind me asking, given that you claim to fund 2 startups every week, how much access would a startup have to either yourself or Xavier? One reason why Kima appeals to me surely is the fact that you two are heading it. Would you actively sit on a board? If so, do you ever sleep?
  - jber 13y ago
    Ah ah ;-) I love HN. I'm not sleeping enough and have 10 children ;-) All our startups are discussing with me by email all day. Not sure will be able to answer to everyone when we will have 800 startups but for the moment, that's ok because working exclusively by email. We are not board member but are here to help all the time not only during boards ;-)
- randall 13y ago
  How do you think your program stacks up when compared to YC directly? Do you think an Airbnb or Dropbox would choose your program vs YC primarily because of the lower friction to money in the bank? Also, if a company already has a v1 of the product, are you planning to do the same deal? (YC often accepts people who are post seed pre series a.)
  - jber 13y ago
    AirBnb & Dropbox were very risky projects like any other projects in this planet. There are many hidden awesome companies on this planet and we are targetting this one. I'm sure we will invest in a future AirBnb or Dropbox. We just need a little time ;-)
  - 13y ago
wellboy 13y ago
I'd say the difference is all about time. Kima is awesome for startups, who need a cash infusion RIGHT NOW. This can often save a startup and make the difference between the startup shutting down and it becoming a billion dollar company. With YC, it's a very long process as it roughly takes 4 months from applying to money in the bank. So Kima can give startups a fat cash injection, which is good for startups who know exactly what to do and just need cash, nothing else. YC is more for long-term startup building, getting into a community, relocating, becoming a Silicon Valley startup etc.
- pg 13y ago
  "With YC, it's a very long process as it roughly takes 4 months from applying to money in the bank." That's not true. Startups get the initial $18k + $80k on acceptance.
  - wellboy 13y ago
    Ok true, then it would be 1 month application period, 2 weeks for an interview invite, 2 weeks to have the interview, so it would be around 2 months vs. 2 weeks, 4 times longer. But that's fine, because your expertise is a more long-term approach over several months, Kima's expertise are burst-investments. You have completely taken up the "hatching investments" space, Kima will completely take up the burst-investment space. I think is the next logical step of startup investments after accelerators. Just as we've now seen accelerators popping up everywhere (and now dying down), we could see Kima-clones popping up everywhere soon.
  - zupa-hu 13y ago
    Let me disagree. Applications are 6 months apart, this makes it for new applicants statistically ~3months + the time until acceptance makes roughly 4months. Considering that lots of startup founders apply many times before being accepted, the median is easily in the years range.
    - pg 13y ago
      The median application is submitted about 2 days before the deadline. It seems misleading to consider multiple applications, since we're talking here about the time between applying and getting money or a no.
deleted 13y ago
[deleted]
gibybo 13y ago
It's not unreasonable to assume that founders receiving Kima15 funding also go on to raise a sizable equity round later. I think the offers can be simplified by saying YC is ($18k + YC program) for 7%, and Kima15 is ($150k + Kima15 network) for 15%. That means the YC program needs to be worth $52k more than the Kima15 network/brand for the lower valuation to make sense. I wouldn't be surprised if it is, but we'd really need stats on the subsequent funding rounds of Kima15 companies to compare them in this way.
- jber 13y ago
  One of our companies FormLabs raised $19M after our seed round ;-) You can imagine the kind of valuation they got... Pret d'Union, French Lending Club clone raised $5M Sparrow has been acquired by Google Very difficult to compare both programs and it's not the goal to compete against anyone.
- pjbrunet 13y ago
  What about the novelty aspect? AngelList is cool right now. Who wants to be just another YC graduate, standing in a long line with teenage fart app founders dying to rub elbows with the Wizard of Oz.
- pg 13y ago
  Financially YC is a force multiplier. Not just incidentally, but by design. So it's misleading to treat it in isolation. And while anyone could raise additional funding after any round, in the YC case the numbers are known. Unless there is some fairly dramatic economic change, the median startup we fund can count on raising several hundred thousand dollars at a valuation (cap) of way more than a million.
amitutk 13y ago
The comparison of 15% for 150k vs 22% for 813k is unfair because it suggests that $5m valuation is entirely because of YC. The fact that many YC companies don't raise clearly indicates that YC helps but not a sufficient factor. Since YC companies' approx valuation is $5m, the 80k note will take about 1.6% equity. So I would say YC is offering 98k for 8.6% (18k + 80k for 7% + 1.6%).

by pg 13y ago

casca 13y ago

A significant difference is that a major part of the value of getting into YC is having successfully completed the selection process. There's a reason that when hiring and looking for funding, companies will usually include the year they went into YC. Given the value of the brand, it's likely that YC could offer less for more equity and still be oversubscribed.

pa5tabear 13y ago
Did you realize you're replying to Paul Graham? I thought it pretty funny telling pg about his program. Of course I understand there are many more readers of the comment, but it still seems directed at him.
- lifeisstillgood 13y ago
  Honestly I cannot see casca's comment as trying to tell pg something about YC, more that casca is emphasising that YC is not exploiting its brand value; so a direct comparison (15% for 150K vs 22% for ~800K) could be seen either as pg does - "hey we are waaaaay better value", or as casca says "hey you are toooo cheap" Anecdotally Henry Ford was told that the drive shafts in Model T's were outlasting the chassis, so should they improve the chassis to match? Hell no, drop the quality of the drive shaft and save some money. I think pg would have made a bad Henry Ford. Edit: there is however a clear need for fast, time boxed, fund raising. Kima is part of the YC-inspired move in that direction, and there is far far more talent and money out there than YC can handle, so there is scope for them. They are just pricing in the middle market, away from the luxury brands :-)
  - will_brown 13y ago
    Henry Ford was cost conscious but not for the reasons one might think. Ford was once sued by his Shareholders because he was purposely selling his cars at a loss to the company. The Michigan Supreme Court held that Henry Ford owed a duty to the shareholders of the Ford Motor Company to operate his business to profit his shareholders, rather than the community as a whole or employees. http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company While shareholders were worried about maximizing profits and dividends, Ford was thinking of bettering the World with $60M in capital surplus. Ford envisioned a World where every family could afford and benefit from a vehicle - he just intended to see to it they owned a Ford which simultaneously would have allowed him to employ more workers.
    - lifeisstillgood 13y ago
      I think aggressively pursuing market share through subsidised products hardly counts as Nobel Peace Prize material. Bill Gates would not have needed to do all that exhausting philanthropy now...
      - derefr 13y ago
        I don't know... replace "car" with "water filter" and "America" with "Africa", and I think you might be able to see Ford's point of view.
        lifeisstillgood 13y ago
        I would love to see a Nairobi business woman become the next African billionaire selling water filters, mosquito nets and led lights to the whole continent, making a fortune and saving lives. but I won't call her a philanthropist when she is picking out her next yacht. I will be pleased she lived however.
- deleted 13y ago
  [deleted]
- clarky07 13y ago
  He's just commenting on it, and it's a reasonable comment at that. It's not like he's telling pg how to run his business.

salimmadjd 13y ago

Useful data, PG! I agree the value of YC is far higher than Kima15. But given the level of competition to get into YC, I would say you have lower risk profile than Kima15. I think they probably fit a nice spot for founders who can't get to YC but are looking for funding. Overall it's win for founders.

jber 13y ago

Hello Paul Great numbers, we really admire a lot what you're doing at YC but not all companies want to join an accelerator or relocate and not all companies are accepted by YC ;-) We see Kima15 as a different offer for different founders all over the world who want to raise funding quickly and when they need it.

skrebbel 13y ago
Wow, cool that you also read Hacker News. If you don't mind me asking, given that you claim to fund 2 startups every week, how much access would a startup have to either yourself or Xavier? One reason why Kima appeals to me surely is the fact that you two are heading it. Would you actively sit on a board? If so, do you ever sleep?
- jber 13y ago
  Ah ah ;-) I love HN. I'm not sleeping enough and have 10 children ;-) All our startups are discussing with me by email all day. Not sure will be able to answer to everyone when we will have 800 startups but for the moment, that's ok because working exclusively by email. We are not board member but are here to help all the time not only during boards ;-)
randall 13y ago
How do you think your program stacks up when compared to YC directly? Do you think an Airbnb or Dropbox would choose your program vs YC primarily because of the lower friction to money in the bank? Also, if a company already has a v1 of the product, are you planning to do the same deal? (YC often accepts people who are post seed pre series a.)
- jber 13y ago
  AirBnb & Dropbox were very risky projects like any other projects in this planet. There are many hidden awesome companies on this planet and we are targetting this one. I'm sure we will invest in a future AirBnb or Dropbox. We just need a little time ;-)
- 13y ago

wellboy 13y ago

I'd say the difference is all about time. Kima is awesome for startups, who need a cash infusion RIGHT NOW. This can often save a startup and make the difference between the startup shutting down and it becoming a billion dollar company. With YC, it's a very long process as it roughly takes 4 months from applying to money in the bank. So Kima can give startups a fat cash injection, which is good for startups who know exactly what to do and just need cash, nothing else. YC is more for long-term startup building, getting into a community, relocating, becoming a Silicon Valley startup etc.

pg 13y ago
"With YC, it's a very long process as it roughly takes 4 months from applying to money in the bank." That's not true. Startups get the initial $18k + $80k on acceptance.
- wellboy 13y ago
  Ok true, then it would be 1 month application period, 2 weeks for an interview invite, 2 weeks to have the interview, so it would be around 2 months vs. 2 weeks, 4 times longer. But that's fine, because your expertise is a more long-term approach over several months, Kima's expertise are burst-investments. You have completely taken up the "hatching investments" space, Kima will completely take up the burst-investment space. I think is the next logical step of startup investments after accelerators. Just as we've now seen accelerators popping up everywhere (and now dying down), we could see Kima-clones popping up everywhere soon.
- zupa-hu 13y ago
  Let me disagree. Applications are 6 months apart, this makes it for new applicants statistically ~3months + the time until acceptance makes roughly 4months. Considering that lots of startup founders apply many times before being accepted, the median is easily in the years range.
  - pg 13y ago
    The median application is submitted about 2 days before the deadline. It seems misleading to consider multiple applications, since we're talking here about the time between applying and getting money or a no.

deleted 13y ago

[deleted]

gibybo 13y ago

It's not unreasonable to assume that founders receiving Kima15 funding also go on to raise a sizable equity round later. I think the offers can be simplified by saying YC is ($18k + YC program) for 7%, and Kima15 is ($150k + Kima15 network) for 15%. That means the YC program needs to be worth $52k more than the Kima15 network/brand for the lower valuation to make sense. I wouldn't be surprised if it is, but we'd really need stats on the subsequent funding rounds of Kima15 companies to compare them in this way.

jber 13y ago
One of our companies FormLabs raised $19M after our seed round ;-) You can imagine the kind of valuation they got... Pret d'Union, French Lending Club clone raised $5M Sparrow has been acquired by Google Very difficult to compare both programs and it's not the goal to compete against anyone.
pjbrunet 13y ago
What about the novelty aspect? AngelList is cool right now. Who wants to be just another YC graduate, standing in a long line with teenage fart app founders dying to rub elbows with the Wizard of Oz.
pg 13y ago
Financially YC is a force multiplier. Not just incidentally, but by design. So it's misleading to treat it in isolation. And while anyone could raise additional funding after any round, in the YC case the numbers are known. Unless there is some fairly dramatic economic change, the median startup we fund can count on raising several hundred thousand dollars at a valuation (cap) of way more than a million.

amitutk 13y ago

The comparison of 15% for 150k vs 22% for 813k is unfair because it suggests that $5m valuation is entirely because of YC. The fact that many YC companies don't raise clearly indicates that YC helps but not a sufficient factor. Since YC companies' approx valuation is $5m, the 80k note will take about 1.6% equity. So I would say YC is offering 98k for 8.6% (18k + 80k for 7% + 1.6%).