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Y Combinator narrows current cohort size by 40%, citing downturn and funding

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Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#61

Post by spoonjim »

jerryjerryjerry wrote: post #49
sbierwagen wrote: post #40

Earlier quoted context omitted.

>and then list it on the stock market for the retail traders to hold their bags. Out of 3,840 startups funded by YC, fifteen have gone public: https://www.ycombinator.com/companies

That's 0.39%, not sure if this is typical but seems pretty low to me. Anything we can learn from this number, or it's simply just a number?

The public markets are fucking stupid. A good company is managed for the next 25 years while a public company has to be managed for the next quarter. This is why private equity investing, including angel investing, beats the socks off of public marketing investing if you know what you're doing (barring access to things like public market manipulation capabilities or insider information)

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#62

Post by spoonjim »

balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

Survival is a precondition for growth. YC companies will run out of their $500K in under a year and will need to raise money in the VC markets. If they can't, there's no 10-year horizon to worry about.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#63

Post by badpun »

balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

It's clear that the valuation of the unicorns that YC and other VCs have been producing for the past ten years was way overblown. Now (i.e. with non-zero interest rates) that there will be less stupid money on the market, the returns on unicorns will be lower.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#65

Post by __alexs »

cortesoft wrote: post #31
balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

Even if you think things will look good in 10 years and want to build a company to succeed at that time, you still need the money NOW if you want to invest in a company now, and the availability of money for investment now is completely dependent on the current financial markets. In other words, the amount of money available to invest is independent of the fundamentals of what that money is invested in.

Are VCs funded by debt? I thought the funds would largely have come from existing cash or equities and were only down 15% from ATH on SPY.

Is this just people being risk averse right now?

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#66

Post by yunohn »

supernova87a wrote: post #50
yunohn wrote: post #33

Earlier quoted context omitted.

No, it’s still 125k for 7%, with an option for an additional 375k on an uncapped safe. Source: https://www.ycombinator.com/deal/

What is a "safe"? I have never heard that term in this usage before.

Simple Agreement for Future Equity: https://www.ycombinator.com/documents

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#67

Post by yunohn »

dstick wrote: post #51
yunohn wrote: post #33

Earlier quoted context omitted.

No, it’s still 125k for 7%, with an option for an additional 375k on an uncapped safe. Source: https://www.ycombinator.com/deal/

True but from a practical standpoint they risk a full $500.000 upfront: “Both investments happen at the same time; they are not contingent on any milestones.” So from a founder perspective, that’s very friendly.

That is true, but the comment I was replying to was implying that you get 500k at 7%, which is wrong.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#68

Post by I_am_tiberius »

I always find it amazing that applicants only have 10 minutes to present themselves. If I only had 10 minutes, I'd be nervous as hell and it would not give a true representation as me as a person and my project - unless the nervousness factor is a key decision factor as well.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#69

Post by wheels »

tptacek wrote: post #15
ShivShankaran wrote: post #10

Earlier quoted context omitted.

It's actually a bad thing. Just like cryto all the YC companies sell to each other. As per their 2022 stats, more than 50% of sales for all YC startups are other YC companies. So this is just a game of hot potato until they get a fat valuation, raise a zillion dollar series and then list it on the stock market for the retail traders to hold their bags. Less YC startups= less customers for other YC startups.

As someone who was on the outside looking in on this until pretty recently, but also has spent much of the last 10 years working with a variety of different YC companies, this is pretty overblown. Moreover: there are so many YC companies at this point, the rate of increase is not an especially interesting marketing fact. For what you're saying to be true, the norm would have to be selling to your batchmates , which..…

Still, I found it staggering that there were 414 companies in the recent batch. When we went through 13 years ago (crazy that it's been that long) we knew pretty much everyone in our batch. It was like 50 people. I had conversations with most of the speakers. A batch of 414 companies (or even 250) sounds like a completely different beast.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#70

Post by xapata »

bragr wrote: post #46
DoreenMichele wrote: post #39

Y Combinator’s Summer 2022 cohort — currently in action — boasts nearly 250 companies, down 40% from the previous cohort, which landed at 414 companies...the batch is still large “relative to the last five years of batches.” Next up, we shall hand wring about Bezos having fewer billions or some nonsense.

He'll be ok. His new sailing super yacht launches soon.

I thought it couldn't get past the bridge?
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