Congrats to YC and all of the startups. Sadly, I can already hear the chants of "Bubble!".
I don't think you will have to wait long to hear that (or something akin to it):
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
#92Basically 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.
Why stop there? How about $50k to everyone in the greater bay area with 10 slides and a business plan?
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#93Earlier quoted context omitted.
"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.
Just because you want smart money doesn't mean you should refuse free money. If an angel were looking at a team that didn't take this money, they'd have to wonder if they were competent enough to run a business.
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#94Earlier quoted context omitted.
Actually, if we assume that Heroku's post-money valuation in their first round of financing was $10m (reasonable since they raised $3m) and that they took a 30% dillution hit each time, this would have returned $2.88m to someone that got in on these terms, or not even enough to cover the investments for that batch. So either the homeruns have to be further out of the park than Heroku or (as is likely) the median retu…
The assumption has to be that Milner will participate in follow-on rounds for companies that look like they will be Heroku or bigger.
I wonder if there's a clause that requires the ability to participate in later rounds. That would make more sense. Otherwise it's not clear that they'd be able to. Heroku raised $3m a month after demo day; I'm not sure what it would have taken for an angel to be able to get into that round.
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#95Earlier quoted context omitted.
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…
I wasn't thinking so much about the amount of capital as to the fact that someone is willing to risk it on someone else's judgment. Money managers aren't known for trusting other people with their money; if they were, they'd be their clients. That someone is willing to do this indicates to me that he considers this "play money", a little loss leader he can dangle to get in on much bigger deals later. It's not really the amount of money going into these deals as to amount of money that it suggests is behind them.
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#96This really is crazy. I'm sure this will only lead to i liar deals for TechStars and others. Angel Investing needs to evolve.
Nothing stops Mr Milner from doing the same offer for TechStars companies, I guess
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#97Earlier quoted context omitted.
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.
Fair enough. I was just wondering whether there were any legal barriers built in to stop people doing these sorts of dodgy deals.
The SEC or IRS would probably consider this some variation of conspiracy to commit fraud. I'm not an American, so I am guessing.
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#98Earlier quoted context omitted.
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,…
DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions. I don't get it, how does this help with that?
Read up on AOL's position during the .com boom.
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#99Earlier quoted context omitted.
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.
Why stop there? How about $50k to everyone in the greater bay area with 10 slides and a business plan?
Happy times are here again!
Re: Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k
#100Earlier quoted context omitted.
Heroku.
Actually, if we assume that Heroku's post-money valuation in their first round of financing was $10m (reasonable since they raised $3m) and that they took a 30% dillution hit each time, this would have returned $2.88m to someone that got in on these terms, or not even enough to cover the investments for that batch. So either the homeruns have to be further out of the park than Heroku or (as is likely) the median retu…
I know the actual numbers for Heroku, and in that YC batch investors pursuing Ron and Yuri's strategy would have been net ahead on Heroku alone. And that batch also included 280 North, which has already been acquired for a significant amount, and several other startups which are likely to generate returns at some point.