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

Y Combinator Gets The Sequoia Capital Seal Of Approval

techcrunch.com

Post reply on HN
Print view View original

11–20 of 45 posts

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#11

Post by mattmaroon »

pclark wrote: post #2

Enormous. Shows the YCombinator model is working, or in the future it'll be working. (which it will)

This is a common fallacy, that investment confers some sort of validity. It doesn't. It means only that Sequoia et al. think Y Combinator's model will work. They don't have a crystal ball, and the model is no more or less likely to work than if they found $2m on the side of the road.

I've thought it will work (for them anyway, not for many of the competitors) since before I went through it, but I don't really consider this validation of my belief.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#12

Post by mattmaroon »

vaksel wrote: post #5
pclark wrote: post #2

Enormous. Shows the YCombinator model is working, or in the future it'll be working. (which it will)

I think this could be a way for Sequoia/Ron Conway to find good companies ahead of other investors. This way, they'll know all about the current crop of YC companies and will be able to spot the winners from day 1. After all as investors, pg would probably have to report what companies he has selected for the program

Investors who have a history of writing checks to YC companies tend to get previews ahead of the rest as it is. Still, for only $2m (a paltry sum for the VC and angels involved) it's well worth the good will.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#13

Post by chiffonade »

mattmaroon wrote: post #10

Hmm, legal question here, since I don't know exactly how this deal is arranged. Is this a fund in the traditional angel/vc model, or do they just now own a chunk of Y Combinator? And if so, do they therefore own a small chunk of past YC companies still in the portfolio? If so, it would seem my startup is now partially owned by some of the many angels and VCs who turned us down, which will really kill some of my reven…

The article states this is a third fund owned by Sequoia and managed by YC. More than likely some of Sequoia's investors got intrigued and wanted to get into the YC game, but didn't feel like taking their money elsewhere because Sequoia has been good to them. Best of both worlds.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#14

Post by ajju »

ivankirigin wrote: post #4

I really don't understand this. Why would YC want to manage a fund and investors? Is it more likely to get Sequoia to invest down the road?

* YC gets:

- $2M more to invest in startups (more money can't hurt and they clearly enjoy what they do)

- Sequoia investing in YC makes YC that much more trustworthy in the eyes of a lot of potential investees and potential acquirers of their startups. Also YC's reach in terms of potential acquirers and potential round 2 investors probably increases.

- It gets YC startups almost all the advantages of having Sequoia as an investor without the dilution of a large Sequoia investment (eg: opens a lot of doors for the YC startups to get their products in the marketplace.)

* In return for $2M, Sequoia gets:

- YC acting as a filter / very high quality pipeline for them

- Early access to YC deals (though not exclusive)

- Most likely, great returns on the $2M itself in the long term.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#15

Post by pclark »

swombat wrote: post #9
ivankirigin wrote: post #4

I really don't understand this. Why would YC want to manage a fund and investors? Is it more likely to get Sequoia to invest down the road?

I guess they don't have enough cash in the bank to keep investing half a million dollars twice a year with no mostly returns for 7+ years (typical time for a start-up to become valuable).

I read it that they wanted to expand their operations, rather than they were running out of money.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#16

Post by pclark »

vaksel wrote: post #5
pclark wrote: post #2

Enormous. Shows the YCombinator model is working, or in the future it'll be working. (which it will)

I think this could be a way for Sequoia/Ron Conway to find good companies ahead of other investors. This way, they'll know all about the current crop of YC companies and will be able to spot the winners from day 1. After all as investors, pg would probably have to report what companies he has selected for the program

surely if Sequoia or Ron Conway rang any YC startup today the startup would fall over themselves to meet?

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#19

Post by ajju »

pclark wrote: post #16
vaksel wrote: post #5

Earlier quoted context omitted.

I think this could be a way for Sequoia/Ron Conway to find good companies ahead of other investors. This way, they'll know all about the current crop of YC companies and will be able to spot the winners from day 1. After all as investors, pg would probably have to report what companies he has selected for the program

surely if Sequoia or Ron Conway rang any YC startup today the startup would fall over themselves to meet?

The problem is, Sequoia or Ron Conway need to have heard about the startup for them to call it. By investing in this fund, they not only get to hear about it before others but also get to monitor each as it grows, find out more about the co.s than other investors, which would help them make a better decision on whether to invest directly and at at what valuation.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#20

Post by colins_pride »

swombat wrote: post #9
ivankirigin wrote: post #4

I really don't understand this. Why would YC want to manage a fund and investors? Is it more likely to get Sequoia to invest down the road?

I guess they don't have enough cash in the bank to keep investing half a million dollars twice a year with no mostly returns for 7+ years (typical time for a start-up to become valuable).

How much did they rake in from reddit?
Post reply on HN