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Will Y Combinator fund a service Company?

news.ycombinator.com

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Re: Will Y Combinator fund a service Company?

#11

Post by khurrams »

pg wrote: post #8
khurrams wrote: post #7

Earlier quoted context omitted.

This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?

Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.

I agree !

Re: Will Y Combinator fund a service Company?

#12

Post by Retric »

pg wrote: post #8
khurrams wrote: post #7

Earlier quoted context omitted.

This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?

Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.

It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.

Re: Will Y Combinator fund a service Company?

#13

Post by motoko »

Retric wrote: post #12
pg wrote: post #8

Earlier quoted context omitted.

Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.

It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.

Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?

Re: Will Y Combinator fund a service Company?

#15

Post by motoko »

motoko wrote: post #13
Retric wrote: post #12

Earlier quoted context omitted.

It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.

Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?

Hm, on closer inspection, I would for 10 billion and an average 2x return. I sure that wish I could delete both these comments.

Re: Will Y Combinator fund a service Company?

#17

Post by DabAsteroid »

pg wrote: post #8
khurrams wrote: post #7

Earlier quoted context omitted.

This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?

Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.

Venture investors are not looking for things with a low risk of failure.

Doug Richard (of BBC's Dragons' Den) says the same thing, here (starts at 4:10 of 6:57; moneyline at 5:30):

http://www.youtube.com/watch?v=Z71dl3lZdvU

You have to understand how investment works. The reason it [the risk-focused pitch] works well is because if there is no risk, there cannot be commensurate reward. I'll repeat it. If there is no risk, there can't be reward. If it's not a risky opportunity, then there's no reward of equal dimension. If you come to me and say, "I've got a risk-free investment," the first thing I know is, there's not much money to be made. There's no free lunch in this world.

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