Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k • Hacker News Board

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

#141

Post by bryanlarsen » Sat, Jan 29, 2011, 3:50 PM UTC

MichaelApproved wrote: post #109

jgilliam wrote: post #24

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

I thought rock bands got shitty contract deals from record labels. These terms seem pretty fair and very unlike the recording industry.

On the surface, YCombinator IS giving a shitty deal. 6% for a few thousand dollars? That's highway robbery.

Except, of course, you're getting a lot more than money for your 6%. The difference is that YCombinator's promise are much less empty than that of a record labels.

(I know, I deflected. Milner's terms are not shitty. It's YCombinator's that are, but only on the surface).

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

#142

Post by nerfhammer » Sat, Jan 29, 2011, 3:52 PM UTC

axod wrote: post #117

MichaelApproved wrote: post #108

Earlier quoted context omitted.

Maybe the extra 150k can help lower the 1/3 failure rate.

I'm pretty sure more money can actually make things worse not better.

Someone should fund 50% of YC co's $150K by coin flip so that we can get a convincing answer to this question

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

#143

Post by JoeAltmaier » Sat, Jan 29, 2011, 3:58 PM UTC

peteforde wrote: post #60

bl4k wrote: post #56

Earlier quoted context omitted.

you almost rescued the analogy, but not quiet.

Edits welcome. Where did I go wrong?

Its exactly like ... investing in a bunch of promising, vetted business plans with motivated founders!

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

#144

Post by JoeAltmaier » Sat, Jan 29, 2011, 3:59 PM UTC

rudiger wrote: post #135

samwise wrote: post #6

$150,000 in convertible debt. With no cap and no discount. I suspect all 40 companies will take the money on those terms. You would be crazy not to.

What are the terms of the deal, specifically? How much to startups have to pay back if they take the $150K, and when do they pay it? What about valuation of the startups (ie. $150k for 10% implies $1.5m valuation)? Or is this more like a loan ($150k, pay back over X years, or upon Y liquidity event)?

It means your plan IS to give some of your company away for money. Instead of holding 100%, getting ramen-profitable, working your butt off to make it.

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

#145

Post by JoeAltmaier » Sat, Jan 29, 2011, 4:00 PM UTC

jackowayed wrote: post #105

One potential issue I see is that YC companies might get complacent. I know that there are tons of factors that lead to the insane productivity that happens during YC, but I'm sure that the fact that many companies need to raise money or fail contributes. Also, the money might keep people working on bad ideas instead of giving up and trying something new. Obviously they could pivot, but $150k gives them the ability t…

Fundraising is famously a huge hit to productivity. This should make YC founders an order of magnitude MORE productive.

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

#146

Post by mdda » Sat, Jan 29, 2011, 4:01 PM UTC

jacquesm wrote: post #38

robryan wrote: post #36

Earlier quoted context omitted.

Is more applications necessarily a bad thing though? Sure they are likely to miss more winners and the application/ interview process is going to be even more time consuming but you would have to think it would translate to a highly quality group.

Reviewing applications is hard work. YC now has more partners and a larger network of alumni so that should help a bit with scaling this.

And that's why this move is a smart one : Yuri has effectively outsourced all the valuation work for the investments onto really smart people that he doesn't have to pay anything for.

While that doesn't seem particularly fair to the rest of the VC community, it's exactly analogous to investing in an S&P ETF (which just invests in a whole bunch of stocks at the current market prices).

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

#147

Post by mdda » Sat, Jan 29, 2011, 4:03 PM UTC

trotsky wrote: post #92

ztan wrote: post #78

Earlier 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?

Because what he's buying (for $0) is the selection and mentoring skills of YC, and the valuation skills of the Series A investors.

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

#148

Post by JoeAltmaier » Sat, Jan 29, 2011, 4:06 PM UTC

mattgratt wrote: post #7

YC is now the best deal that exists.

Hm. There are folks still using the 'old-fashioned' model of fundraising manually, building a team, honing a product and going to market.

YC may be the best deal for a crew of wet-behind-the-ears startup virgins, I'll grant that.

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

#149

Post by fromRussia » Sat, Jan 29, 2011, 4:07 PM UTC

DST is a money laundering operation. Yuri Milner is a criminal.

I can't believe Paul Graham deals with these guys. He should understand that Russia is outside of his circle of competence. His smarts are not enough to make the judgement.

Russia gets roughly $90B annually for oil and gas. Most of the money gets stolen one way or the other and ends up in the funds like DST.

Dealing

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

#150

Post by mdda » Sat, Jan 29, 2011, 4:11 PM UTC

peteforde wrote: post #55

Honestly, I'm surprised that nobody did this sooner. Hell, didn't Conway invest in six of the last round anyhow? This is sort of like going to the race track and betting on every horse. Except at this particular race track, the horses are all above average and multiple horses can win each race. I'd take those odds.

The clever thing about this is that Yuri doesn't have any of the due-diligence costs of Ron Conway : He's outsourced it all.

OTOH, maybe/probably Ron Conway actually enjoys the thrill of the hunt for new exciting stuff, so he doesn't consider it a particular cost.

Right now, according to the article, YC (pg) is happy about the situation : it improves their brand, helps entrepreneurs, etc. But I'm sure that they'll realize that Yuri just got in at a better valuation (on average) than they did, but they're doing all the work. Of course, they probably already have realized this, but they don't have many other options now - other than inserting 'poison pill' anti-freeloader terms into their deals...