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A New Standard Deal

blog.ycombinator.com

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Re: A New Standard Deal

#81

Post by redis_mlc »

dang wrote: post #24
headcanon wrote: post #4

Earlier quoted context omitted.

If cost of living is so high, I wonder why they wouldn't invest in a dorm-like living space for founders? I'm not familiar with the area, so I imagine there's reasons for it, but being able to focus on work instead of life-maintenance details seems like it would benefit the organization.

From the beginning, YC was opposed to the incubator model, which that idea would be more aligned with. Even having startups share offices was never something they were interested in. That was partly because they had no interest in managing offices, or managing at all (or offices, for that matter). But there were deeper reasons: the sense that great startups develop in environments of their own creation, a suspicion o…

FYI: there's a "YC House" townhouse in SF that several startups use for a while, then move on.

Source: been there.

Re: A New Standard Deal

#82

Post by lultimouomo »

ryanSrich wrote: post #77
rsweeney21 wrote: post #39

This is great for YC, not great for YC backed startups. By giving each company $25K less, they can now place bets on 3,000 more companies. Less money for you, less risk for them. I wonder if their success rate has declined as their batch sizes have gotten larger. YC has become less and less attractive to me over the years. Is it just me?

You do YC for the network and guaranteed funding post demo day. Getting $125k is inconsequential and has almost no barring on YC’s value to a new startup.

But they are saying that they now want to bring 3000 more companies to demo day, which dilutes its value.

Re: A New Standard Deal

#83

Post by dang »

redis_mlc wrote: post #81
dang wrote: post #24

Earlier quoted context omitted.

From the beginning, YC was opposed to the incubator model, which that idea would be more aligned with. Even having startups share offices was never something they were interested in. That was partly because they had no interest in managing offices, or managing at all (or offices, for that matter). But there were deeper reasons: the sense that great startups develop in environments of their own creation, a suspicion o…

FYI: there's a "YC House" townhouse in SF that several startups use for a while, then move on. Source: been there.

For sure. I've been to those too. Startups choosing to colocate is different from the incubator model at the investor level.

Re: A New Standard Deal

#84

Post by cannaceo »

vmception wrote: post #54
cannaceo wrote: post #46

Earlier quoted context omitted.

It’s unrealistic to project those incentives in to future years

It’s realistic to use them as market signals for actual price discovery in the current year

I’d wager the rent rate is necessary to cover the mortgage, homeowners policy, other insurance, and repairs. I don’t think landlords have 36% IRR on their investments. Rents at that large of a discount aren’t sustainable.

Re: A New Standard Deal

#85

Post by redis_mlc »

dang wrote: post #83
redis_mlc wrote: post #81

Earlier quoted context omitted.

FYI: there's a "YC House" townhouse in SF that several startups use for a while, then move on. Source: been there.

For sure. I've been to those too. Startups choosing to colocate is different from the incubator model at the investor level.

No, the lease is held by YC, not the "startups choosing to colocate."

So the investor holds the lease.

Re: A New Standard Deal

#86

Post by maest »

mauriziocalo wrote: post #68
joshpadnick wrote: post #33

Our startup is profitable, scaling, and in the single-digit millions of revenue per year. We don't have any investors but are still capital constrained. The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us, nor do we want the requirement of having to meet with other startups once a week since we're already quite busy. Does YC have a "funding offering" for startups at our stage?

> The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us This is the wrong way to look at it. Instead, ask yourself: would you exchange 7% of your company to join the YC community and be able to leverage their resources forever? The answer should be a resounding yes if you think your company will be > 7.5% more valuable if you join YC [1]. Which it should [2]. The $125K is just the cherry on top and ju…

This reasoning would be true only if YC was the only investor in town. In truth, the options actually are a superset of:

* Do not raise

* Join YC at a very low valuation and justify it with the nebulous value of the "YC network"

* Raise from any other investor at an appropriate valuation and benefit from the nebulous value of their network.

Re: A New Standard Deal

#87

Post by WA »

mauriziocalo wrote: post #68
joshpadnick wrote: post #33

Our startup is profitable, scaling, and in the single-digit millions of revenue per year. We don't have any investors but are still capital constrained. The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us, nor do we want the requirement of having to meet with other startups once a week since we're already quite busy. Does YC have a "funding offering" for startups at our stage?

> The default YC valuation of $125k/0.07 = ~$1.8M is way too low for us This is the wrong way to look at it. Instead, ask yourself: would you exchange 7% of your company to join the YC community and be able to leverage their resources forever? The answer should be a resounding yes if you think your company will be > 7.5% more valuable if you join YC [1]. Which it should [2]. The $125K is just the cherry on top and ju…

Another way of thinking:

Would you exchange 7% of your company forever to join the YC community that might have diminishing returns after several years?

As my sibling poster posted: There is more than one path to success and you make it sound as if YC kinda guarantees success and that all of this is a total no-brainer.

Re: A New Standard Deal

#88

Post by beagle3 »

cannaceo wrote: post #84
vmception wrote: post #54

Earlier quoted context omitted.

It’s realistic to use them as market signals for actual price discovery in the current year

I’d wager the rent rate is necessary to cover the mortgage, homeowners policy, other insurance, and repairs. I don’t think landlords have 36% IRR on their investments. Rents at that large of a discount aren’t sustainable.

No, they don’t have that IRR if their investments were made at 2019 market prices. They have more than that IRR even with all those expenses if they bought at 1980 prices.

What’s unsustainable is the property prices of 2019 (and June 2020 because real estate asset prices are sticky). “Investment” is path dependent and is irrelevant to pricing for the market as a whole (it obviously does to a single player)

Re: A New Standard Deal

#89

Post by tomhoward »

redis_mlc wrote: post #85
dang wrote: post #83

Earlier quoted context omitted.

For sure. I've been to those too. Startups choosing to colocate is different from the incubator model at the investor level.

No, the lease is held by YC, not the "startups choosing to colocate." So the investor holds the lease.

> the lease is held by YC

That doesn't sound right to me (I've been in the YC network for 10+ years, as has dang), and is at odds with what tlb (an original and still-serving YC partner) said in this comment [1] above, and what has always been YC ethos.

Maybe the person who told you that was mistaken? Or it may have been a YC partner or staff member doing it privately?

[1] https://news.ycombinator.com/item?id=23655750

Re: A New Standard Deal

#90

Post by Dacod »

Havoc wrote: post #70

Didn’t realize yc did so big batches. Surely it’s basically a shotgun approach at that stage

They are not going to do a batch with 3000 companies. They are saying all in all this will allow them to fund more companies over the coming years - " In the coming years, this will enable us to fund as many as 3000 more companies".
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