8 ms·

Y Combinator growth equity fund?

281 points by kamilszybalski 11y ago

andyjsong 11y ago
Somewhat relevant: http://techcrunch.com/2015/03/02/if-y-combinator-did-a-growth-fund-it-would-be-very-very-late-stage/ http://techcrunch.com/2015/03/02/if-y-combinator-did-a-growt...
mwilkison 11y ago
Is this a fund for follow-on investments in YC startups? In the past YC has indicated they dislike follow-on investments by accelerators since it sends a negative signal re: the startups they decide not to invest in.
- philip1209 11y ago
  What if they added in a right to invest a certain amount in future rounds, such that they don't lead the growth?
  - MangoDiesel 11y ago
    They don't want to do this, because they don't want to become a "stamp of approval" for companies coming out of YC. Specifically, if a company comes out of YC and is looking to raise further funding down the road, it becomes an important data point if YC decided to continue investing with them or not. By not participating in future rounds as a policy, they avoid this potential issue.
    - cactusface 11y ago
      Why is it important not to pick favorites? Are they trying to avoid killing companies they thought were bad but end up good later on?
      - deleted 11y ago
        [deleted]
- jonathannorris 11y ago
  I'm assuming this is for larger/later rounds so that YC can invest in their very successful companies (think Airbnb and Dropbox), and not for Series A/B companies.
- brayton 11y ago
  YC does follow on investments but they are done by partners today. Negative signaling exists but it is swept aside because it is not a YC fund following on. Now they will have a large fund to do it so will be interesting to see how they navigate this landscape.
softdev12 11y ago
It would be interesting if Y Combinator attempted to convert to an entity that was able to publicly list on a stock exchange and sell shares to the average investor - much like private equity shops Blackstone and Carlyle have done by going public. https://www.wsws.org/en/articles/2007/06/blac-j25.html https://www.wsws.org/en/articles/2007/06/blac-j25.html http://www.carlyle.com/news-room/news-release-archive/carlyle-group-prices-initial-public-offering http://www.carlyle.com/news-room/news-release-archive/carlyl... If there is a bubble valuation in the public-to-private market, YC could potentially arbitrage the valuation difference into cash for its LPs.
- prostoalex 11y ago
  GSV Capital is already playing the same niche http://gsvcap.com/investment-portfolio/ http://gsvcap.com/investment-portfolio/ As well as some Fidelity and T. Rowe Price mutual funds that you sometimes see mentioned in late-stage deals.
- dillchen 11y ago
  Agreed! That'd be really interesting. I was thinking more BERK though. Wonder if Sam's Shareholder Letters could receive the same readership as Buffett's Shareholder Letters.
  - Plough_Jogger 11y ago
    I think you mean BRKA / BRKB
- IBM 11y ago
  It'd be great to see what their actual IRRs are if they did that.
- dylanjermiah 11y ago
  Sam Altman talked about this on the Econ Talk podcast, I believe he said he has 'no interest' in running a public company.
- aswanson 11y ago
deleted 11y ago
[deleted]
andy_ppp 11y ago
"Pooled Investment Fund Interests"[1] is checked which mean it's a fund for shares in multiple companies? Not sure if they are going full on VC? Anyway I'll buy some :-) [1] More info: https://www.moneyadviceservice.org.uk/en/articles/what-are-pooled-investment-funds https://www.moneyadviceservice.org.uk/en/articles/what-are-p...
jackgavigan 11y ago
It could be that they've invested all the money from their last fund and are just putting a new fund in place to continue making accelerator investments.
adoming3 11y ago
"Just shut up and take my money" - every investor
xenophon 11y ago
Another relevant article hinting at this development: http://www.businessinsider.com/y-combinator-raising-money-for-late-stage-fund-2015-3 http://www.businessinsider.com/y-combinator-raising-money-fo... The impetus behind a growth equity fund, according to the article, would be to provide "long-term capital that allows startups to continue to operate in beta [sic, I assume -- they probably mean privately] without having to go public." I can see why this approach would make sense for optimistic investors who are familiar with the impatience of public market investors with the kind of moonshot, long-term investments that are game-changing but don't pay off during next quarter's earning call. That's one charitable interpretation of this decision, if it's true -- Y Combinator wants to counteract the abundance of hedge fund money pouring into this space (with attendant expectations of a near-term public liquidity event) with strategic capital and a longer time horizon.
- o0-0o 11y ago
  Relevant, but it's not hedge fund money. It's private equity & venture capital money, which is backed by large institutional investors like retirement plans. Hedge funds are dying a slow death.
  - xenophon 11y ago
    Not quite true, which is exactly the point -- T. Rowe Price, Fidelity, Tiger Global, BlackRock, Coatue, Valiant and Wellington are a few of the public asset managers that are heavily outgunning traditional VCs and pumping up valuations throughout the growth-stage investment space. Between them they have an enormous amount of capital to bring to bear. These funds have a mix of institutional LPs like university endowments and normal high-net worth/retail investors, but either way, I believe they usually don't mandate the ~5 yr lockup period (not sure of the avg. VC investment period/fund life these days) that PE and VC firms require of their investors. As such, in my understanding, traditional VCs are both structurally and philosophically inclined to hold their investments for longer. This may not be the impetus behind YC Growth at all, but I do think such a fund would be more patient with its portfolio, allowing it to take greater risks, and that's (probably) a good thing.
gtirloni 11y ago
I've heard that Delaware is 1) safe heaven for litigation and 2) most forward-thinking in terms of business-related bureaucracy. Is that true? What makes West Coast companies incorporate so far from SV?
- wyc 11y ago
  One reason is that Delaware companies get their cases disputed at the state's specialized business court[0]. The trials are expected to be speedier and outcomes fairer. [0] https://en.wikipedia.org/wiki/Delaware_Court_of_Chancery https://en.wikipedia.org/wiki/Delaware_Court_of_Chancery
  - carbocation 11y ago
    In addition, there is a tremendous amount of case law in Delaware, whittling away the rough legal edges which may still remain in other jurisdictions.
- ChuckMcM 11y ago
  Delaware has a specific court for corporate litigation, the Court of Chancery which is presided over by a judge. So questions are generally scheduled more easily, and decided more quickly. That they have a lot of companies incorporated there leads to both a lot of services for companies trying to incorporate there and a lot of case law which can be relied on to understand how bylaws will be interpreted when brought before the court. In places where there isn't a lot of case law you end up cutting a new trail and a lot of uncertainty in what the outcome would be.
- mmanfrin 11y ago
  IIRC, Deleware is so often the state of incorporation because the cost to incorporate is small (~$90-$300).
  - dvanduzer 11y ago
    The cost of incorporation in Delaware is higher than in many states ($50 in Colorado, for example). ChuckMcM's cousin post pretty much covers the reasons. The only thing he left out was the 0% corporate income tax rate. Nevada often comes up for this reason as well. edit (re grandparent): Delaware is definitely not a "safe haven" for litigation. It's more predictable for the basics, but it isn't going to prevent you from an Eastern Texas District Court summons.
late2part 11y ago
My Uber drive today was bemoaning how hard it is to get a job in the DC area with his name, Mohammed. I said that wasn't right, but there's no reason he couldn't go by Michael or Moe. It's interesting to see that on this form, the "Related Person"'s last name is "YC CONTINUITY MANAGEMENT I, LLC". I suppose it's not terribly remarkable, but it goes to show that many of these forms have ambiguous meanings that are wide to receive.
- thuuuomas 11y ago
  > there's no reason he couldn't go by Michael or Moe. One might be disinclined to cater to hateful ignorance, for starters.
  - hayksaakian 11y ago
    If he really needs to feed his family, it's a legitimate option.
  - eseehausen 11y ago
    Nonetheless, this is a common strategy that's used by people with names that sound non-white. Not everyone is responsible for combatting larger structural injustice while they're just trying to get employed at a sustenance level.
- piker 11y ago
  "Related persons" are specifically defined in the instructions to include entities and in such a way that they generally include management companies and general partner entities.
datashovel 11y ago
My question is, long term how does SV not become just another large bureaucratic / corrupt power center like D.C. or Manhattan? Today it feels good to see those who deserve it get rewarded, but I imagine that's how people in NY felt about Manhattan when it was a fraction of what it is today. Same of course with D.C. shortly after (for example) the American Revolution.
- jalonso510 11y ago
  SV's basically already becoming a center of entrepreneurial finance rather than entrepreneurism. Fewer companies can afford office space and fewer non-repeat founders can afford rent in palo alto, mountain view, sf, etc..., so the people who live in those cities are increasingly those tied to the finance of startups but with higher salaries like VCs and lawyers.
  - dylanjermiah 11y ago
    Property is so expensive because supply is being artificially restrained.
    - dopamean 11y ago
      This conversation does not need to be had on this thread.
      - dylanjermiah 11y ago
        Why not?
- malchow 11y ago
  Because SV generally allows for creative destruction (viz. failure).
- ganeumann 11y ago
  No, because the entrepreneurship business has boom and bust cycles. Here's a portrait from 1982: "Q: Why are people so willing to sell out their employers? A: Two reasons. In the confrontational style of American management, people are pitted against each other ruthlessly. There is no trust, no loyalty. Reason No. 2: Money speaks. Life in Silicon Valley is very fast, very competitive. To keep up, you have to drive a Mercedes, live in a $300,000-to-$500,000 house, have a pool in the backyard, a cabin in Lake Tahoe if you’re a ski buff, a yacht in Santa Cruz Harbor if you like to sail. You have to belong to the Decathlon Club or the Palo Alto Golf Club and send your kids to private schools like Bellarmine or St. Francis. Then there are business dinners, cocktail parties, barbecues. It all costs money." (from http://www.people.com/people/archive/article/0,,20082780,00.html http://www.people.com/people/archive/article/0,,20082780,00....) But then the 1970s entrepreneurial revolution faltered and SV had to reboot. Between 1984 and 1992 most of the old power centers were weakened. SV could reboot, and did with the Internet companies. Similar thing happened after 2001.
sharemywin 11y ago
YC has been talking more about working on bigger more ambitious projects/companies, so maybe its away to fund things that won't get funded by traditional VCs.
phantom_oracle 11y ago
They sure do take a playbook from the innovation they try to foster and do new things (although it isn't necessarily "new" in the sense that other funds like this don't exist). In the business of business-acceleration, I guess this makes YC the McKinsey or GS? Thing is, they can't keep stretching the payout to investors. Even a moonshot (as a business) needs to experience a liquidity event of some sort, so they're either inflating the so-called bubble with this or... They're playing dirty with some of their first-to-market companies by helping them grow and stay cheap enough until they emerge as monopolies (-redacted- AirBnB come to mind mostly). Edit: to my surprise, Uber isn't a YC company, edit made. Edit 2: I am checking a list of YC companies and other big ones I see that have potential are: - Disqus - Heroku (exited so doesn't count) - MixPanel - Olark - Embedly - HomeJoy - Stripe (of course!) - Codecademy - Firebase I stopped at Summer 2011, but some of these are now so ubiquitous on the internet, that it makes you wonder...
- cactusface 11y ago
  Why is that playing dirty? I don't get it.
  - phantom_oracle 11y ago
    It's mostly a figure of speech. Every company is entitled to some type of discreet monopolization. Thing is, governments (especially pro-capitalist ones) don't like monopolies, which is where the reference comes from.
    - cactusface 11y ago
      Oh ok, I missed the connection to monopolies. Thanks for spelling it out.
    - dylanjermiah 11y ago
      >Thing is, governments (especially pro-capitalist ones) don't like monopolies, which is where the reference comes from. A true monopoly rarely, if ever, actually exists in a real free market. However, artificial government backed monopolies are rampant today.
staunch 11y ago
Most of the money to be made in VC is by doubling down on successful investments. YC has foregone billions by not doing this. Competing with later stage VCs may incline them to compete with YC, which would be a very great thing for the world.
- codelitt 11y ago
  I couldn't agree more. I would love to see a program that would actually compete with YC. They're pretty much on their own ahead of the pack and a non-competitive business is never a good thing.
pbiggar 11y ago
`Does the Issuer intend this offering to last more than one year? No` Does this mean that they're only offering entry into the fund in the next year, or that the money will all be distributed over the next year? If the latter, this would imply that this is a single investment vehicle. Though the wording does imply the former, I would think.
- jalonso510 11y ago
  it's the former. the filing is just disclosing the offering of shares in the investment vehicle itself, and that sale is expected to be complete this year.
marincounty 11y ago
So why not start up a pooled venture capital fund? It will be one risky fund, but they all seem risky? I am eagerly awaiting the day Janet Yellen raises interest rates! There's too much free money being given out, and it's not going to the poor, or middle class.(I thought stricter banking regulations were good after the crash, but boy was I wrong!) These investment entities(hedge, venture, etc.) have too much Monopoly money to throw around. Why shouldn't Y Combinator get in on the Party? Actually, they late to the Party? 'Let's get the best loans, and while we are at it snag the reluctant Retail Investor who's 2008 wounds are starting to close, and just might give up their bloody wad of cash siting in that horrid CD?'
jaydub 11y ago
Interesting that Kleiner Perkins is moving downstream http://www.nytimes.com/2015/06/17/business/dealbook/kleiner-perkins-to-write-smaller-checks-with-4-million-fund.html?ref=technology http://www.nytimes.com/2015/06/17/business/dealbook/kleiner-... Related?
hkarthik 11y ago
If I had to guess, YCombinator is starting to diversify it's funding strategies for early stage startups as it starts to diversity the types of startups that it invests in. The same funding terms simply won't work for an e-commerce shop selling Jellyfish compared to one trying to commercialize nuclear power. This new type of fund probably allows them to fund the latter startups in a more appropriate way.
rdlecler1 11y ago
YC: you probably want to run this by your legal counsel. By posting your open ended 506b filling for a proposed growth equity fund on Hacker News (which you own), you are engaging in general solicitation and advertising, which requires a 506c filling. You don't want to end up like Goldman Sachs when they tried to offer the Facebook pre-IPO fund to their private wealth clients. The SEC shut them down.
- aptwebapps 11y ago
  Posting or allowing to remain posted? Unless 'kamilszybalski works for YC.
- piker 11y ago
  >"By posting your open ended 506b filling for a proposed growth equity fund on Hacker News (which you own), you are engaging in general solicitation and advertising, which requires a 506c filling." This is a link to a limited notice filing, required by SEC rules promulgated under the Securities Act. It is hosted on the SEC's public dissemination service and in the public domain. If referring to information in this filing constituted public offering, nearly every Reg D offering would be broken.
  - rdlecler1 11y ago
    When news leaked of Goldman Sachs' Facebook pre-IPO fund that would only be accessible to their most prized clients, Goldman was accused of solicitations and advertising. They were not allow to sell shares to Americans. I'm not sure if the news leak was the result of seeing the SEC filling or it came from within Goldman, but the SEC took a broad view on what they considered to be advertising and solicitation when Goldman did not come out on the record to say it, and frankly didn't need to disseminate that information to raise awareness.
nphyte 11y ago
i wish more companies innovated like these guys! the world being a happier place would actually be possible. Good on you'll

281 points by kamilszybalski 11y ago

Somewhat relevant: http://techcrunch.com/2015/03/02/if-y-combinator-did-a-growth-fund-it-would-be-very-very-late-stage/ http://techcrunch.com/2015/03/02/if-y-combinator-did-a-growt...

mwilkison 11y ago

Is this a fund for follow-on investments in YC startups? In the past YC has indicated they dislike follow-on investments by accelerators since it sends a negative signal re: the startups they decide not to invest in.

philip1209 11y ago
What if they added in a right to invest a certain amount in future rounds, such that they don't lead the growth?
- MangoDiesel 11y ago
  They don't want to do this, because they don't want to become a "stamp of approval" for companies coming out of YC. Specifically, if a company comes out of YC and is looking to raise further funding down the road, it becomes an important data point if YC decided to continue investing with them or not. By not participating in future rounds as a policy, they avoid this potential issue.
  - cactusface 11y ago
    Why is it important not to pick favorites? Are they trying to avoid killing companies they thought were bad but end up good later on?
    - deleted 11y ago
      [deleted]
jonathannorris 11y ago
I'm assuming this is for larger/later rounds so that YC can invest in their very successful companies (think Airbnb and Dropbox), and not for Series A/B companies.
brayton 11y ago
YC does follow on investments but they are done by partners today. Negative signaling exists but it is swept aside because it is not a YC fund following on. Now they will have a large fund to do it so will be interesting to see how they navigate this landscape.

softdev12 11y ago

It would be interesting if Y Combinator attempted to convert to an entity that was able to publicly list on a stock exchange and sell shares to the average investor - much like private equity shops Blackstone and Carlyle have done by going public. https://www.wsws.org/en/articles/2007/06/blac-j25.html https://www.wsws.org/en/articles/2007/06/blac-j25.html http://www.carlyle.com/news-room/news-release-archive/carlyle-group-prices-initial-public-offering http://www.carlyle.com/news-room/news-release-archive/carlyl... If there is a bubble valuation in the public-to-private market, YC could potentially arbitrage the valuation difference into cash for its LPs.

prostoalex 11y ago
GSV Capital is already playing the same niche http://gsvcap.com/investment-portfolio/ http://gsvcap.com/investment-portfolio/ As well as some Fidelity and T. Rowe Price mutual funds that you sometimes see mentioned in late-stage deals.
dillchen 11y ago
Agreed! That'd be really interesting. I was thinking more BERK though. Wonder if Sam's Shareholder Letters could receive the same readership as Buffett's Shareholder Letters.
- Plough_Jogger 11y ago
  I think you mean BRKA / BRKB
IBM 11y ago
It'd be great to see what their actual IRRs are if they did that.
dylanjermiah 11y ago
Sam Altman talked about this on the Econ Talk podcast, I believe he said he has 'no interest' in running a public company.
aswanson 11y ago

deleted 11y ago

[deleted]

andy_ppp 11y ago

"Pooled Investment Fund Interests"[1] is checked which mean it's a fund for shares in multiple companies? Not sure if they are going full on VC? Anyway I'll buy some :-) [1] More info: https://www.moneyadviceservice.org.uk/en/articles/what-are-pooled-investment-funds https://www.moneyadviceservice.org.uk/en/articles/what-are-p...

jackgavigan 11y ago

It could be that they've invested all the money from their last fund and are just putting a new fund in place to continue making accelerator investments.

adoming3 11y ago

"Just shut up and take my money" - every investor

xenophon 11y ago

Another relevant article hinting at this development: http://www.businessinsider.com/y-combinator-raising-money-for-late-stage-fund-2015-3 http://www.businessinsider.com/y-combinator-raising-money-fo... The impetus behind a growth equity fund, according to the article, would be to provide "long-term capital that allows startups to continue to operate in beta [sic, I assume -- they probably mean privately] without having to go public." I can see why this approach would make sense for optimistic investors who are familiar with the impatience of public market investors with the kind of moonshot, long-term investments that are game-changing but don't pay off during next quarter's earning call. That's one charitable interpretation of this decision, if it's true -- Y Combinator wants to counteract the abundance of hedge fund money pouring into this space (with attendant expectations of a near-term public liquidity event) with strategic capital and a longer time horizon.

o0-0o 11y ago
Relevant, but it's not hedge fund money. It's private equity & venture capital money, which is backed by large institutional investors like retirement plans. Hedge funds are dying a slow death.
- xenophon 11y ago
  Not quite true, which is exactly the point -- T. Rowe Price, Fidelity, Tiger Global, BlackRock, Coatue, Valiant and Wellington are a few of the public asset managers that are heavily outgunning traditional VCs and pumping up valuations throughout the growth-stage investment space. Between them they have an enormous amount of capital to bring to bear. These funds have a mix of institutional LPs like university endowments and normal high-net worth/retail investors, but either way, I believe they usually don't mandate the ~5 yr lockup period (not sure of the avg. VC investment period/fund life these days) that PE and VC firms require of their investors. As such, in my understanding, traditional VCs are both structurally and philosophically inclined to hold their investments for longer. This may not be the impetus behind YC Growth at all, but I do think such a fund would be more patient with its portfolio, allowing it to take greater risks, and that's (probably) a good thing.

gtirloni 11y ago

I've heard that Delaware is 1) safe heaven for litigation and 2) most forward-thinking in terms of business-related bureaucracy. Is that true? What makes West Coast companies incorporate so far from SV?

wyc 11y ago
One reason is that Delaware companies get their cases disputed at the state's specialized business court[0]. The trials are expected to be speedier and outcomes fairer. [0] https://en.wikipedia.org/wiki/Delaware_Court_of_Chancery https://en.wikipedia.org/wiki/Delaware_Court_of_Chancery
- carbocation 11y ago
  In addition, there is a tremendous amount of case law in Delaware, whittling away the rough legal edges which may still remain in other jurisdictions.
ChuckMcM 11y ago
Delaware has a specific court for corporate litigation, the Court of Chancery which is presided over by a judge. So questions are generally scheduled more easily, and decided more quickly. That they have a lot of companies incorporated there leads to both a lot of services for companies trying to incorporate there and a lot of case law which can be relied on to understand how bylaws will be interpreted when brought before the court. In places where there isn't a lot of case law you end up cutting a new trail and a lot of uncertainty in what the outcome would be.
mmanfrin 11y ago
IIRC, Deleware is so often the state of incorporation because the cost to incorporate is small (~$90-$300).
- dvanduzer 11y ago
  The cost of incorporation in Delaware is higher than in many states ($50 in Colorado, for example). ChuckMcM's cousin post pretty much covers the reasons. The only thing he left out was the 0% corporate income tax rate. Nevada often comes up for this reason as well. edit (re grandparent): Delaware is definitely not a "safe haven" for litigation. It's more predictable for the basics, but it isn't going to prevent you from an Eastern Texas District Court summons.

late2part 11y ago

My Uber drive today was bemoaning how hard it is to get a job in the DC area with his name, Mohammed. I said that wasn't right, but there's no reason he couldn't go by Michael or Moe. It's interesting to see that on this form, the "Related Person"'s last name is "YC CONTINUITY MANAGEMENT I, LLC". I suppose it's not terribly remarkable, but it goes to show that many of these forms have ambiguous meanings that are wide to receive.

thuuuomas 11y ago
> there's no reason he couldn't go by Michael or Moe. One might be disinclined to cater to hateful ignorance, for starters.
- hayksaakian 11y ago
  If he really needs to feed his family, it's a legitimate option.
- eseehausen 11y ago
  Nonetheless, this is a common strategy that's used by people with names that sound non-white. Not everyone is responsible for combatting larger structural injustice while they're just trying to get employed at a sustenance level.
piker 11y ago
"Related persons" are specifically defined in the instructions to include entities and in such a way that they generally include management companies and general partner entities.

datashovel 11y ago

My question is, long term how does SV not become just another large bureaucratic / corrupt power center like D.C. or Manhattan? Today it feels good to see those who deserve it get rewarded, but I imagine that's how people in NY felt about Manhattan when it was a fraction of what it is today. Same of course with D.C. shortly after (for example) the American Revolution.

jalonso510 11y ago
SV's basically already becoming a center of entrepreneurial finance rather than entrepreneurism. Fewer companies can afford office space and fewer non-repeat founders can afford rent in palo alto, mountain view, sf, etc..., so the people who live in those cities are increasingly those tied to the finance of startups but with higher salaries like VCs and lawyers.
- dylanjermiah 11y ago
  Property is so expensive because supply is being artificially restrained.
  - dopamean 11y ago
    This conversation does not need to be had on this thread.
    - dylanjermiah 11y ago
      Why not?
malchow 11y ago
Because SV generally allows for creative destruction (viz. failure).
ganeumann 11y ago
No, because the entrepreneurship business has boom and bust cycles. Here's a portrait from 1982: "Q: Why are people so willing to sell out their employers? A: Two reasons. In the confrontational style of American management, people are pitted against each other ruthlessly. There is no trust, no loyalty. Reason No. 2: Money speaks. Life in Silicon Valley is very fast, very competitive. To keep up, you have to drive a Mercedes, live in a $300,000-to-$500,000 house, have a pool in the backyard, a cabin in Lake Tahoe if you’re a ski buff, a yacht in Santa Cruz Harbor if you like to sail. You have to belong to the Decathlon Club or the Palo Alto Golf Club and send your kids to private schools like Bellarmine or St. Francis. Then there are business dinners, cocktail parties, barbecues. It all costs money." (from http://www.people.com/people/archive/article/0,,20082780,00.html http://www.people.com/people/archive/article/0,,20082780,00....) But then the 1970s entrepreneurial revolution faltered and SV had to reboot. Between 1984 and 1992 most of the old power centers were weakened. SV could reboot, and did with the Internet companies. Similar thing happened after 2001.

sharemywin 11y ago

YC has been talking more about working on bigger more ambitious projects/companies, so maybe its away to fund things that won't get funded by traditional VCs.

phantom_oracle 11y ago

They sure do take a playbook from the innovation they try to foster and do new things (although it isn't necessarily "new" in the sense that other funds like this don't exist). In the business of business-acceleration, I guess this makes YC the McKinsey or GS? Thing is, they can't keep stretching the payout to investors. Even a moonshot (as a business) needs to experience a liquidity event of some sort, so they're either inflating the so-called bubble with this or... They're playing dirty with some of their first-to-market companies by helping them grow and stay cheap enough until they emerge as monopolies (-redacted- AirBnB come to mind mostly). Edit: to my surprise, Uber isn't a YC company, edit made. Edit 2: I am checking a list of YC companies and other big ones I see that have potential are: - Disqus - Heroku (exited so doesn't count) - MixPanel - Olark - Embedly - HomeJoy - Stripe (of course!) - Codecademy - Firebase I stopped at Summer 2011, but some of these are now so ubiquitous on the internet, that it makes you wonder...

cactusface 11y ago
Why is that playing dirty? I don't get it.
- phantom_oracle 11y ago
  It's mostly a figure of speech. Every company is entitled to some type of discreet monopolization. Thing is, governments (especially pro-capitalist ones) don't like monopolies, which is where the reference comes from.
  - cactusface 11y ago
    Oh ok, I missed the connection to monopolies. Thanks for spelling it out.
  - dylanjermiah 11y ago
    >Thing is, governments (especially pro-capitalist ones) don't like monopolies, which is where the reference comes from. A true monopoly rarely, if ever, actually exists in a real free market. However, artificial government backed monopolies are rampant today.

staunch 11y ago

Most of the money to be made in VC is by doubling down on successful investments. YC has foregone billions by not doing this. Competing with later stage VCs may incline them to compete with YC, which would be a very great thing for the world.

codelitt 11y ago
I couldn't agree more. I would love to see a program that would actually compete with YC. They're pretty much on their own ahead of the pack and a non-competitive business is never a good thing.

pbiggar 11y ago

`Does the Issuer intend this offering to last more than one year? No` Does this mean that they're only offering entry into the fund in the next year, or that the money will all be distributed over the next year? If the latter, this would imply that this is a single investment vehicle. Though the wording does imply the former, I would think.

jalonso510 11y ago
it's the former. the filing is just disclosing the offering of shares in the investment vehicle itself, and that sale is expected to be complete this year.

marincounty 11y ago

So why not start up a pooled venture capital fund? It will be one risky fund, but they all seem risky? I am eagerly awaiting the day Janet Yellen raises interest rates! There's too much free money being given out, and it's not going to the poor, or middle class.(I thought stricter banking regulations were good after the crash, but boy was I wrong!) These investment entities(hedge, venture, etc.) have too much Monopoly money to throw around. Why shouldn't Y Combinator get in on the Party? Actually, they late to the Party? 'Let's get the best loans, and while we are at it snag the reluctant Retail Investor who's 2008 wounds are starting to close, and just might give up their bloody wad of cash siting in that horrid CD?'

jaydub 11y ago

Interesting that Kleiner Perkins is moving downstream http://www.nytimes.com/2015/06/17/business/dealbook/kleiner-perkins-to-write-smaller-checks-with-4-million-fund.html?ref=technology http://www.nytimes.com/2015/06/17/business/dealbook/kleiner-... Related?

hkarthik 11y ago

If I had to guess, YCombinator is starting to diversify it's funding strategies for early stage startups as it starts to diversity the types of startups that it invests in. The same funding terms simply won't work for an e-commerce shop selling Jellyfish compared to one trying to commercialize nuclear power. This new type of fund probably allows them to fund the latter startups in a more appropriate way.

rdlecler1 11y ago

YC: you probably want to run this by your legal counsel. By posting your open ended 506b filling for a proposed growth equity fund on Hacker News (which you own), you are engaging in general solicitation and advertising, which requires a 506c filling. You don't want to end up like Goldman Sachs when they tried to offer the Facebook pre-IPO fund to their private wealth clients. The SEC shut them down.

aptwebapps 11y ago
Posting or allowing to remain posted? Unless 'kamilszybalski works for YC.
piker 11y ago
>"By posting your open ended 506b filling for a proposed growth equity fund on Hacker News (which you own), you are engaging in general solicitation and advertising, which requires a 506c filling." This is a link to a limited notice filing, required by SEC rules promulgated under the Securities Act. It is hosted on the SEC's public dissemination service and in the public domain. If referring to information in this filing constituted public offering, nearly every Reg D offering would be broken.
- rdlecler1 11y ago
  When news leaked of Goldman Sachs' Facebook pre-IPO fund that would only be accessible to their most prized clients, Goldman was accused of solicitations and advertising. They were not allow to sell shares to Americans. I'm not sure if the news leak was the result of seeing the SEC filling or it came from within Goldman, but the SEC took a broad view on what they considered to be advertising and solicitation when Goldman did not come out on the record to say it, and frankly didn't need to disseminate that information to raise awareness.

nphyte 11y ago

i wish more companies innovated like these guys! the world being a happier place would actually be possible. Good on you'll