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The YC VC Program

ycombinator.com

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Re: The YC VC Program

#81

Post by pyoung »

pg wrote: post #30
debacle wrote: post #13

What kind of messy things happen with 150k that don't happen with 80k?

It's a matter of degree. In the old days, when a startup fell apart, the founders would just go their separate ways. When every startup got $150k, sometimes they'd end up fighting over the carcass instead. Our hope is that now they'll fight half as hard.

Out of curiosity, what does the 'carcass' usually consist of? Wouldn't any leftover money go back to investors? Or does that get divided out to founders (seems like that would be a bad incentive). Or is it mostly related to the product (domains, code, etc..)?

Re: The YC VC Program

#82

Post by [deleted] »

46Bit wrote: post #80
cs702 wrote: post #76

YC is perhaps the most innovative angel/accelerator/VC firm in the planet. Despite all the success the firm has had, it is still acting like a startup -- constantly questioning, experimenting, tinkering, and gradually optimizing via careful trial-and-error, based on the real-world results achieved with each batch of companies. Clearly, it's run by hackers.

I think this change is a definite plus, but I disagree this sort of change is startup-specific. Trying new things is just how you're supposed to build a company, at least when you care for the long term rather than next quarter.

[deleted]

Re: The YC VC Program

#83

Post by philwelch »

w1ntermute wrote: post #78
philwelch wrote: post #38

Earlier quoted context omitted.

But then you'd have to live in Kansas City, not the Bay Area, where all the investors and talent are. There are many parts of the Bay Area less expensive than SF proper.

That's why I'm saying that YC should take the first step, since it has the power to make a startup community in KC a real thing. I also think that having the entire tech community concentrated in the Bay Area is a bad thing. It leads to mental inbreeding and a narrow perspective.

What's the benefit to YC?

Re: The YC VC Program

#84

Post by heriC »

pg wrote: post #51
waterlesscloud wrote: post #43

Earlier quoted context omitted.

I get why it's great for investors, but why is it great for founders? Especially when they could use the time to change plans.

The office hours help all the startups. Decreasing the amount invested helps the successful and borderline startups because it means less of our time is taken up mediating founder disputes in the ones that are exploding. And yes, that was a significant time suck; Jessica says the majority of her time last batch was spent dealing with founder breakups.

Would the reduced chance of success of a single founder startup be compensated for by the reduction in investment, time required and increased number of companies that could be funded? Even if you think single founders succeed only half as often, having twice as many with no founder breakup issues could put YC ahead.

Re: The YC VC Program

#85

Post by w1ntermute »

philwelch wrote: post #83
w1ntermute wrote: post #78

Earlier quoted context omitted.

That's why I'm saying that YC should take the first step, since it has the power to make a startup community in KC a real thing. I also think that having the entire tech community concentrated in the Bay Area is a bad thing. It leads to mental inbreeding and a narrow perspective.

What's the benefit to YC?

As I said, concentrating the community in the Bay Area leads to mental inbreeding and a narrow perspective. Funding Midwestern startups might lead to successes that couldn't have been achieved in the Bay Area. Also, such startups could be funded with less money and will have a longer runway.

Re: The YC VC Program

#86

Post by argumentum »

THANK YOU! This makes 250% sense, particularly for "no idea" companies. 150k led to several bad decisions at the beginning, and led to our breakup later on. 80k will be a lot more valuable than 150k, and make startups think more carefully about how to spend money.

Perhaps for capital intensive startups that ought to be funded, there can be a separate arrangement.

This shows why YC is YC.. it constantly innovates and is not afraid to change things up as needed.

Re: The YC VC Program

#87

Post by tomhoward »

sjtgraham wrote: post #74
pg wrote: post #51

Earlier quoted context omitted.

The office hours help all the startups. Decreasing the amount invested helps the successful and borderline startups because it means less of our time is taken up mediating founder disputes in the ones that are exploding. And yes, that was a significant time suck; Jessica says the majority of her time last batch was spent dealing with founder breakups.

PG how much of this attributable to $150k being too much money? Wasn't the last batch the largest by significant margin? Is it not expected that there will be more failure and therefore more demand on partner time as batch size increases? In another comment, you mention founders scrapping over the carcass of their failed startups; what is it exactly they're fighting over? Surely the money has run out and anything lef…

what is it exactly they're fighting over? Surely the money has run out and anything left should be returned to investors in good faith?

I assume he's talking about cases where the founders fall out well before the money has run out.

Previously, when there was little (money or IP) left, they'd just go their separate ways and start something new.

But with money still in the bank, founders may believe the company still has some value and a future, and will fight to assume control of it.

Re: The YC VC Program

#88

Post by shimon »

pyoung wrote: post #81
pg wrote: post #30

Earlier quoted context omitted.

It's a matter of degree. In the old days, when a startup fell apart, the founders would just go their separate ways. When every startup got $150k, sometimes they'd end up fighting over the carcass instead. Our hope is that now they'll fight half as hard.

Out of curiosity, what does the 'carcass' usually consist of? Wouldn't any leftover money go back to investors? Or does that get divided out to founders (seems like that would be a bad incentive). Or is it mostly related to the product (domains, code, etc..)?

Technically if a company were to dissolve, its assets would belong to shareholders (investors, founders, YC, etc.). In practice, though, it's rare for everyone to agree to dissolution while there's still money in the bank. Instead, you have a guy who has given up arguing against a guy who wants to put in a few more months. Less money in the bank means less arguing about "another pivot" vs. "let's just move on to new things".

Re: The YC VC Program

#89

Post by colinsidoti »

jedberg wrote: post #3

This is great! I always thought the $150k was too much of a runway. It allowed the poor startups to limp along for too long. And besides, the real value from these investments isn't the money, it is the mindshare you get with the VCs. This will help make that mindshare greater.

It'll be interesting to see how the mindshare arrangement plays out.

VC's are used to writing huge checks and providing value after a company has solved product-market fit. This asks them to write a tiny check and provide very early expertise they generally don't provide.

Re: The YC VC Program

#90

Post by ajju »

001sky wrote: post #73
ajju wrote: post #63

Earlier quoted context omitted.

Yup, the first thing I thought when I read this: I hope this doesn't end up hurting non-resident applicants to YC. The "prevailing wages" for an engineering position (the minimum salary the company can pay an engineer on a H1B visa) in CA are about $75K. This means that there is almost no leeway even if only one of the founders needs an H1B: this funding alone would not cover it. YC is very aware and supportive of im…

Question - do you need the $75k lump sum, or just the pro-rata per month? its only ~6k/month salary per fte, of course depending on the runway...

The company has to prove that it will be able to pay the employee's salary for the duration of the visa. A lump sum in the bank is the easiest way of doing this. A steady or growing revenue stream per month is another way.
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