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

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

#71

Post by nicholasjbs »

nostrademons wrote: post #53
patio11 wrote: post #25

Earlier quoted context omitted.

Capitalism happens. plays tiny violin Less sardonically: if YC is so ridiculously superior to other investment models that investing money at these terms is profitable knowing nothing of the actual company invested in , then the system is broken. This is the market's corrective measure, attempting to come up with a better approximation of the true value of early stage startups. Might it discomfit people who made a lo…

My first thought is that there must be a ridiculous amount of money floating around in the capital markets right now...

That might be true, but I don't think this particular news provides much evidence either way. The total amount being invested across all 40 companies is less than many companies' A rounds.

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

#73

Post by dave1619 »

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.

And it helps when your investment company now owns 10% of Facebook. Smart guy who takes bold risks.

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

#75

Post by sushrutbidwai »

webwright wrote: post #68
sushrutbidwai wrote: post #57

Earlier quoted context omitted.

Right. We will just invest in all YC companies. Why bother reading up business plans, checking out markets, exploring new things. YC thinks some one is good, we will put our money. If 10% of YC companies give huge exits fine. As investors - our job is to just provide money. Why bother with research? And as an entrepreneur, do you really want to take money from some one who might not have enough knowledge about you an…

"And as an entrepreneur, do you really want to take money from some one who might not have enough knowledge about you and your business?" Um, yes. Taking money with these terms is a no-brainer. It doesn't preclude you from taking on more active money or taking on advisors. Anyone who puts together an angel syndicate almost always has investors who say, "I'm really busy, so I can't help out much, but here's my money".…

Most things I learnt about my own business had been through quality meetings with quality investors who can ask really good questions. At least from first set of investors, thats what I look for the most rather than money.

Having said so I do see your point as well and we can just agree to disagree.

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

#76

Post by patio11 »

nostrademons wrote: post #53
patio11 wrote: post #25

Earlier quoted context omitted.

Capitalism happens. plays tiny violin Less sardonically: if YC is so ridiculously superior to other investment models that investing money at these terms is profitable knowing nothing of the actual company invested in , then the system is broken. This is the market's corrective measure, attempting to come up with a better approximation of the true value of early stage startups. Might it discomfit people who made a lo…

My first thought is that there must be a ridiculous amount of money floating around in the capital markets right now...

Much like I look at "200,000 visitors! Whoa!" and think it is a big number, and you guys might think "Hmm, perhaps there was something interesting going on that second.", I think we collectively share a borked perception of what constitutes a big amount of capital.

$150k is a meaningful amount for an early-stage startup. Multiplied by 40, that is $6 million. $6 million is, seat of the pants calculation, two orders of magnitude lower than 2% of United States VC funding in a typical year. VC funding is three orders of magnitude lower than the amount of outstanding bonds in the US. That is one asset class: there are others.

Or, for another visualization: if this investment is one pixel, then the US bond market is a grizzled old neckbeard sporting six monitors at 1024x768. The remainder from that calculation might fit an iPhone, but I don't know the resolution on those off the top of my head.

Long story short: there is always a ridiculous amount of money in the capital markets.

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

#78

Post by ztan »

trotsky wrote: post #48

Basically he just paid $6M to have a seat at the table and be a guaranteed call when they're raising their series A. I guess that's one way to get in to the early stage game.

That's $6M every batch, at least $12M a year. Assuming YC classes does not expand. I think PG mentioned about 1/3 of the YC companies fail. So that's $4M in the water every year. Out of the rest 2/3s chances of being a Heroku are... actually I'm going stop here because I'm sure they've worked out all the math already.

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

#79

Post by kjksf »

knowsnothing613 wrote: post #61
trotsky wrote: post #48

Basically he just paid $6M to have a seat at the table and be a guaranteed call when they're raising their series A. I guess that's one way to get in to the early stage game.

It's not about PR. It's about a halo effect. DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions. He can afford to gamble $6M on YC startups, if they will create demand in the market for his hundreds of millions dollars worth Groupon, Facebook, Zynga shares. It's a good assymetry position to have. If one of the 40 becomes the next google,…

From the article: "Now he’s partnering (as an individual, not as part of DST)"

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

#80

Post by sushrutbidwai »

waterlesscloud wrote: post #69
DevX101 wrote: post #63

Earlier quoted context omitted.

" But such blanket offers will mean lesser money available to non-YC companies" I actually think precisely the opposite will happen.

I think you're right. It's like the concept of "anchoring", setting a new normal.

I dont have first hand experience of US placements. But this is what happened in India when IT services started booming.

If you go to a top college, they dont interview much. You get a very fat paycheck. If you go to tier II college you are interviewed a bit more and given a bit thinner paycheck.

Over a period of time this became a positive feedback cycle and is the core reason for very low quality yet expensive workforce.

What I feel in my gut is - such blanket investments normally take up valuations to such levels over a period of time that it becomes unsustainable. Whether it is with job markets or investments or real estate.

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