Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

techcrunch.com

Post reply on HN
Print view View original

21–30 of 85 posts

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#21

Post by frankphilips »

il wrote: post #9

It's pretty incredible to think that YC is likely the highest performing venture fund in history. For 380 companies that works out to about $7.6 million invested into a portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after dilution), that puts the value of YC's share at $155-$545 million on that $7 million invested.

I think it's mainly because of Paul Graham. He's a visionary and he's excellent at spotting awesome teams (even if their ideas suck). Nobody would have thought twice about Airbnb, but Paul saw something that other investors didn't see. He noticed how effectively the team worked together. He also knew they would pivot if they needed to. Having that type of discernment has allowed YC to find & fund all these amazing startups. His hunch with the Airbnb guys paid off considering the company is valued at over a billion now!

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#22

Post by [deleted] »

cluda01 wrote: post #13
adambenayoun wrote: post #11

What's interesting is that if 2-3 years ago, ycombinator had the ability to identify and pick winners. I have the impression that in the past year it became the other way around. Y combinator by picking companies are in fact the kingmakers and are creating the winners.

Not too clear about what your last sentence means. Could you please clarify?

[deleted]

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#23

Post by Heinleinian »

adambenayoun wrote: post #11

What's interesting is that if 2-3 years ago, ycombinator had the ability to identify and pick winners. I have the impression that in the past year it became the other way around. Y combinator by picking companies are in fact the kingmakers and are creating the winners.

Last I checked you still have to get users/customers to be a winner in business. YC has clout with investors, so their companies are more likely to get investment, but that's not the right measure of who is a winner.

The millions of consumers you need as customers (or, if B-to-B, say fortune 500 companies) don't give a damn about the YC stamp of approval.

Increased investment only turns into increased "wins" if you use that money to get more users/customers, i.e. with a better sales team, more marketing dollars. Is this happening? I don't know, it sure seems like a lot of software companies are eschewing traditional marketing and sales and counting on viral growth to be a success, but you can't just hire more engineers and increase a product's viral-ness. I don't think anyone truly understands what makes a software product catch on.

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#24

Post by nikcub »

il wrote: post #9

It's pretty incredible to think that YC is likely the highest performing venture fund in history. For 380 companies that works out to about $7.6 million invested into a portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after dilution), that puts the value of YC's share at $155-$545 million on that $7 million invested.

~20x isn't close in the pantheon of record venture deals, especially when normalized to an IRR (annual return).

Benchmark Capital is often cited since their $6M investment was worth 500M+ at IPO less than a year later and then eventually ballooned to being worth $5B as shit got crazy.

the 12.7M Accel invested into Facebook in the A was worth ~$10B at IPO. I think even that is less on IRR than the ebay deal

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#25

Post by DanielRibeiro »

skrebbel wrote: post #5

How very Silicon Valley of the author to treat these numbers almost like they're profits, or any reasonable sort of "income" at all. The real question is: how much of that money has already been multiplied tenfold, through exits, IPOs or exorbitant profits?

In Techcrunch's defense, they have published a very good article on these kind of numbers[1]. Actually, they have published a lot of articles on this[2].

What is more insteresting, is that Paul Graham reiterates the Power Law of Startups he talked to Peter Thiel recently[3]:

Peter Thiel: Do Y-Combinator companies follow a power law distribution?

Paul Graham: Yes. They’re very power law.

[1] http://techcrunch.com/2011/07/30/vanity-metrics/

[2] http://techcrunch.com/search/vanity+metrics

[3] http://blakemasters.tumblr.com/post/21869934240/peter-thiels...

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#28

Post by kunle »

nikcub wrote: post #24
il wrote: post #9

It's pretty incredible to think that YC is likely the highest performing venture fund in history. For 380 companies that works out to about $7.6 million invested into a portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after dilution), that puts the value of YC's share at $155-$545 million on that $7 million invested.

~20x isn't close in the pantheon of record venture deals, especially when normalized to an IRR (annual return). Benchmark Capital is often cited since their $6M investment was worth 500M+ at IPO less than a year later and then eventually ballooned to being worth $5B as shit got crazy. the 12.7M Accel invested into Facebook in the A was worth ~$10B at IPO. I think even that is less on IRR than the ebay deal

True, but probably >200 of those companies are still active, and its only been 7 years. Would you bet that that 20X return so far is going lower?

Re: Paul Graham: Y Combinator Companies Have Raised Over $1 Billion

#29

Post by prpx »

frankphilips wrote: post #21
il wrote: post #9

It's pretty incredible to think that YC is likely the highest performing venture fund in history. For 380 companies that works out to about $7.6 million invested into a portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after dilution), that puts the value of YC's share at $155-$545 million on that $7 million invested.

I think it's mainly because of Paul Graham. He's a visionary and he's excellent at spotting awesome teams (even if their ideas suck). Nobody would have thought twice about Airbnb, but Paul saw something that other investors didn't see. He noticed how effectively the team worked together. He also knew they would pivot if they needed to. Having that type of discernment has allowed YC to find & fund all these amazing st…

Don't underestimate being the dominant startup accelerator. While probably well deserved, it's also kind of a "self-fulfilling prophecy".
Post reply on HN