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> It's crazy that this is even an issue. Agreed. "Investors fighting over YC companies" also shows that there is insufficient high-quality deal flow (real or

> It's crazy that this is even an issue. Agreed. "Investors fighting over YC companies" also shows that there is insufficient high-quality deal flow (real or perceived). Stated another way, there is a supply/demand imbalance for high-quality deal flow. While hard to tap, there's an opportunity for creating/finding/aggregating high-quality startups. Obviously, replicating YC has been tried, so a real solution likely requires some innovative approach that I can't currently think of. But, if I'd bet on a company that creates a solution because there is clearly high demand from willing and able buyers.

angersock 12y ago
One wonders...what makes a "high-quality" deal? I suspect the problem is more that VCs are neglecting the first half of their job description.
- jacquesm 12y ago
  No, they are just trying to maximize their return. They still carry plenty of risk but the ratio changes in their favour if they use YC as a vetting machine. And with a couple of out-of-the-ballpark hits under its belt YC is now a proven kingmaker.
jacquesm 12y ago
It's much simpler than that. YC is a stamp-of-approval, and there is a very large amount of money available for pre-vetted deals because this substantially improves the chances VCs have for a return on their investment. So the YC advantage is what creates this scarcity, and that's rapidly starting to exhibit network effects and this is one of those. The 'classes' model is a stroke of genius, it reduces the question of whether or not an investment is a good one to is this investment a good one against the backdrop of a whole pile of possible investments. That question in isolation is much harder to answer than the question with a lot of material around it to compare against.
- akbar501 12y ago
  Good points. > there is a very large amount of money available for pre-vetted deals This is part of the point I was making. Which is that there is an obvious opportunity for a company to come along and commercialize this demand. I'm not saying it's easy, just that it would be lucrative. More specifically, the demand volume far exceeds the amount of supply that YC or any single organization can produce. YC is benefiting from the demand b/c they produce a high quality product (pre-vetted startups). However, the demand would exist with or without YC...just that without YC the supply/demand imbalance would be worse. If YC could double its output while maintaining quality, or if a 2nd organization/company comes along and creates high-quality, pre-vetted startup supply then they too will enjoy high demand.
  - jacquesm 12y ago
    You're missing one crucial bit I think. The vetting is the hard part. And YC has that down to an art form, they've crunched the numbers on thousands of applications, have built up a large network of alumni who are very smart individually and scary smart collectively. This is one very tough act to follow. Not that that should stop you from trying.

angersock 12y ago

One wonders...what makes a "high-quality" deal? I suspect the problem is more that VCs are neglecting the first half of their job description.

jacquesm 12y ago
No, they are just trying to maximize their return. They still carry plenty of risk but the ratio changes in their favour if they use YC as a vetting machine. And with a couple of out-of-the-ballpark hits under its belt YC is now a proven kingmaker.

jacquesm 12y ago

It's much simpler than that. YC is a stamp-of-approval, and there is a very large amount of money available for pre-vetted deals because this substantially improves the chances VCs have for a return on their investment. So the YC advantage is what creates this scarcity, and that's rapidly starting to exhibit network effects and this is one of those. The 'classes' model is a stroke of genius, it reduces the question of whether or not an investment is a good one to is this investment a good one against the backdrop of a whole pile of possible investments. That question in isolation is much harder to answer than the question with a lot of material around it to compare against.

akbar501 12y ago
Good points. > there is a very large amount of money available for pre-vetted deals This is part of the point I was making. Which is that there is an obvious opportunity for a company to come along and commercialize this demand. I'm not saying it's easy, just that it would be lucrative. More specifically, the demand volume far exceeds the amount of supply that YC or any single organization can produce. YC is benefiting from the demand b/c they produce a high quality product (pre-vetted startups). However, the demand would exist with or without YC...just that without YC the supply/demand imbalance would be worse. If YC could double its output while maintaining quality, or if a 2nd organization/company comes along and creates high-quality, pre-vetted startup supply then they too will enjoy high demand.
- jacquesm 12y ago
  You're missing one crucial bit I think. The vetting is the hard part. And YC has that down to an art form, they've crunched the numbers on thousands of applications, have built up a large network of alumni who are very smart individually and scary smart collectively. This is one very tough act to follow. Not that that should stop you from trying.