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Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

news.ycombinator.com

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Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#21

Post by comatose_kid »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

Here's a great way to grow:

How about inserting a clause in your funding agreement? Any company that you fund should provide a small percentage of profits + time to help new founders.

This small percentage of profits would be given to YC, on condition that YC would use it exclusively to fund new companies. Of course, 'profit' implies that YC would be able to fund 1000 startups a year only if its existing investments are successful. Essentially, YC would earn the opportunity to increase the # of companies it funds based on the success of its previous investments.

And as for the founders time, it seems you already have that covered.

The most limited resource seems to be your time. I don't think there's an easy answer to that one. You may need to expand your partnership....

The question for me is: are there even 1000 companies worth funding every year? That would be cool to see. Perhaps some of the profits could be directed towards developing the base of potential entrepreneurs.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#22

Post by volida »

pg wrote: post #11
RyanGWU82 wrote: post #10

Earlier quoted context omitted.

Two hypotheses: 1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators. 2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be in…

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

I think the reason everyone is applying to YC is because of networking and connections which is really valuable. Now, if there were 1000 companies being funded by YC it means there would be so many people with access to these connections. Which means the value of YC's network would drop. A lot of people then wouldn't feel really erged to apply while this competition the are feeling among them when applying, would be lost, if anyone with iq higher than 130 was getting funded...

*update:

more people getting funded = (lim markets - shrinks/saturation) =&gt probability people fail &gt probability people succeed =&gt bubble breaks

this will be the feelings and hopes bubble, and not investments bubble, because obviously whereas with the same money (e.g. 1 million USD) invested during 1999 only 1 company could appear, using YC's approach with the same money, more startups are given birth.

Thus this is the bubble also but not in investors return (because the rate of propability increases using YC's approach) but in founders feelings...

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#23

Post by danw »

jullrich1 wrote: post #20
pg wrote: post #11

Earlier quoted context omitted.

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

VCs = Angels = YC = Agents…They all finance and support young entities for a % of a future asset. Compare a very scalable model, IMG Worldwide. Take baseball for comparison sake. Talent Scout = PG colleague who reviews applications using performance criteria = bank using advanced credit scoring system to approve or reject loans Reddit = Alfonso Soriano = Successful loan applicant Paul Allen = PG = Drew Rosenhaus YC i…

So what your suggesting is creating mini YCs with specialist interests?

For example you could have a mobile apps 'agent'. This person would seek out the best ideas for mobile apps, find the best teams, maintain connections with mobile blogs & mobile network operators and pass the best teams back up to main YC.

O'r you could have geographical specialists who, for example, look out for startups in the UK and send the most promising over to Boston/Mountain View.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#24

Post by jullrich1 »

danw wrote: post #23
jullrich1 wrote: post #20

Earlier quoted context omitted.

VCs = Angels = YC = Agents…They all finance and support young entities for a % of a future asset. Compare a very scalable model, IMG Worldwide. Take baseball for comparison sake. Talent Scout = PG colleague who reviews applications using performance criteria = bank using advanced credit scoring system to approve or reject loans Reddit = Alfonso Soriano = Successful loan applicant Paul Allen = PG = Drew Rosenhaus YC i…

So what your suggesting is creating mini YCs with specialist interests? For example you could have a mobile apps 'agent'. This person would seek out the best ideas for mobile apps, find the best teams, maintain connections with mobile blogs & mobile network operators and pass the best teams back up to main YC. O'r you could have geographical specialists who, for example, look out for startups in the UK and send the m…

Yeah Dan, that's right on. The basic business practices employed today would flow through to the tentacles of specialization and the over reaching controls and management would still reside at the top like any other holding company structure. It's likely you could improve on the typical holding company structure but something along those lines. I work at the Group level of a global financial services firm and I think my stripes are showing a bit here :) Not just mobile apps but also a p2p apps expert, b2b apps expert, transaction processing expert...the options are as broad as the marketplace. I'm thinking big.

Re: Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

#26

Post by aglarond »

pg wrote: post #19
nostrademons wrote: post #18

Earlier quoted context omitted.

How about hooking up previously-successful YC entrepeneurs with new applicants? At this point, I'd value the Reddit guys as much as mentors as you or RTM (no offense). YC would then grow like a B-tree. In the beginning, all founders are on the same "page". As the page grows beyond its size limits, the page is split, successful founders are promoted up to the parent level, and there's more room to new founders at the…

We already do this. We actively introduce new founders to "alumni" that can help them. There are now a lot of them. At the first dinner, instead of having an outside expert speak, we invite all the alumni. This time there were more speakers than audience at that dinner. The peer-to-peer aspect of YC already scales. The hard part to scale is what we partners do.

Considering that what the partners do is the most valuable aspect of YC, I don't see this scaling without adding more partners. This begs the question of what YC is: is it a company that forms more companies, or is it an angel-firm that creates more angel-firms?

The latter can work only by forming these new angel-firms in different startup-beds. There are only a limited number of startup-beds, and a limited number of connections that can be used by partners. When these resources are used up, the only choice is to move to another area and start again.

The former is what YC already does, within the limits of the partners. Adding new partners could increase the number of companies funded each year, but only to a limited extent. Finding a partner is hard because it needs to be someone that won't disturb the current dynamic and who will bring in new connections/resources that aren't currently represented.

Frankly, I don't see any way to truly scale what YC does. Encouraging startups to form is limited by its very nature to within bounds formed by the market. These bounds have not yet been reached, but still exist.

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