Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

techcrunch.com

Post reply on HN
Print view View original

41–50 of 199 posts

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#41

Post by andreshb »

DevX101 wrote: post #37

For all the talk from U.S. politicians about encouraging innovation, it takes the Russian to come here and put his money where his mouth is.

Consider, also, that most entrepreneurs in tech are foreigners (or children of), Vivek Wadwha had an interesting article on that. But those that stand out: Larry+Sergei.

If "The Russian" comes to the U.S. to make an investment is because the U.S. has done a really really good job in terms of policy to make it easy and convenient for foreign investors to bring money to the U.S. now they (gov) need to do the same for talent/entrepreneurs.

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#42

Post by peteforde »

hugh3 wrote: post #31
staunch wrote: post #23

Earlier quoted context omitted.

Right. $150,000 paid in advance. Whenever the company raises its first significant money (usually >=$1M) that $150,000 buys equity at the same rate the new investors are paying.

Is there any way to game this? For instance: 1. I get $150K in convertible debt from Yuri. 2. At the end of YC, my rich friend Joe decides to invest a million dollars in my company at a valuation of five hundred trillion dollars. Yuri thus gets an insanely small slice of my company. 3. Two days later, my company buys Joe's shares back for a million dolars. 4. Now my company goes off to seek actual funding at a sane v…

You're leaving out the part about getting accepted into YC and then being willing to blackball your reputation and ability to ever raise money to do anything, again.

Who would do that for $150k? To me, this is the equivalent of leaving $20 on the table to see if you can trust your friends.

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#43

Post by rdamico »

Unless there are additional terms at play here (e.g. liquidation preference), this means that unless YC companies raise a series A before exiting, Yuri and SV Angels won't get more than a 1x return (plus interest).

It's hard to believe the math works out here, but obviously a lot of thought and number crunching has gone into this decision. Great news for YC though!

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#45

Post by jacquesm »

sushrutbidwai wrote: post #35

This sounds like a campus placement scene. If you get in a top college, you wont be even interviewed properly or see how you have changed in last few years/months. We will just hire you with fat paychecks. As shown by history - this does not work in the long run and makes things worse than better. Dont get me wrong - YC is great, pg and rest of the team do an amazing job of selecting startups. But such blanket offers…

> But such blanket offers will mean lesser money available to non-YC companies.

They could have bought a boat instead, investing is not a zero sum game, they don't have to spend the money.

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#46

Post by webwright »

robryan wrote: post #9

So this investment isn't at a valuation and the valuation is only decided at a future round at which point this converts into an amount of equity based off that valuation? I've read about convertible notes before just a little confusing at first.

In the event of a funding event (or change of control), this $150k turns into $150k worth of stock at the valuation established AT THAT TIME.

Example #1: Company A takes the offer and sells for $1m in 6 months. The debt converts to $150k in stock, netting the investor $150k.

Example #2: Company B takes the the offer and raises $1m at a pre-money valuation of $3m (selling 25% of the company and establishing a post-money valuation of $4m). The $150k turns into $150k in stock at the new valuation, so 3.75% of the company.

Normally, there are various ways (discounts, caps, etc) to reward the early investor for the additional risk they are taking for investing so early.

Basically what this means is YC companies can (if they want) eschew funding at demo day, hold out for great terms, or just get busy creating value and raise money when they have more leverage. This is huge.

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#47

Post by peteforde »

jgilliam wrote: post #24

Web startups are now rock bands, and YC is the record label.

I know people are excited right now, but this is a terrible analogy. Rock bands don't need labels to succeed anymore, and the vast majority of record labels are deeply corrupt. They are consolidating to avoid bankruptcy, and throwing their CapEx funding into litigators and lobbyists so that they have someone to blame when in reality it was their greed and ignorance that brought their downfall.

Does that sound like what's happening at Y-Combinator?

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#49

Post by jacquesm »

peteforde wrote: post #42
hugh3 wrote: post #31

Earlier quoted context omitted.

Is there any way to game this? For instance: 1. I get $150K in convertible debt from Yuri. 2. At the end of YC, my rich friend Joe decides to invest a million dollars in my company at a valuation of five hundred trillion dollars. Yuri thus gets an insanely small slice of my company. 3. Two days later, my company buys Joe's shares back for a million dolars. 4. Now my company goes off to seek actual funding at a sane v…

You're leaving out the part about getting accepted into YC and then being willing to blackball your reputation and ability to ever raise money to do anything, again. Who would do that for $150k? To me, this is the equivalent of leaving $20 on the table to see if you can trust your friends.

I'm fairly sure that they can afford lawyers good enough to close that particular loophole.

Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

#50

Post by staunch »

jacquesm wrote: post #32
staunch wrote: post #26

Every YC batch should have at least 1-2 big wins. They're betting that it's more important not to miss out on those than to save a little money trying to pick the winners. A great strategy if you can afford it.

> Every YC batch should have at least 1-2 big wins. Can you quantify a big win?

Heroku.
Post reply on HN