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Y Combinator Gets The Sequoia Capital Seal Of Approval

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Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#31

Post by ajju »

pg wrote: post #29
ajju wrote: post #14

Earlier quoted context omitted.

* 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 a…

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.) I want to emphasize that this one isn't true. We're not claiming any such advantage. Sequoia won't be a direct investor in these startups.

Kudos for ensuring "truth-in-advertising" even when it's someone else (me) doing the advertising for you :)

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#32

Post by pg »

aristus wrote: post #3

Question for paul: your limiting factor is not money, but time, right? Are you just going to say yes to more interviewees or will you interview more startups? Will YC alums take a more active role between funding and demo day?

Because of the recession, money started to be the limiting factor. We didn't feel like we could prudently expand when there might not be any more returns for the next several years.

We are probably going to invite more startups to interviews, and we definitely hope to accept a higher percentage of those we invite. And yes, we're going to encourage YC alums to help the other startups. They already do a lot, but we're going to set up more ways for this to happen.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#33

Post by pg »

sachinag wrote: post #7
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 also worry that it will hurt YC companies raising angel/VC money after YC. If these angels and Sequoia pass, won't other investors think that something is wrong with the company?

No. The deal doesn't give them any special rights or access to the startups. So nothing changes in that respect.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#35

Post by gommm »

colins_pride wrote: post #20
swombat wrote: post #9

Earlier quoted context omitted.

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?

Let's see, if I remember well they invested about 80 000$ in reddit (there was a second investment from YC if I'm not mistaken). So from this, they maybe took 10-15%. Reddit sold for about 12 million dollars, so that would mean about 1.2-1.8 million: 2-3 years of yc investment.

Of course those numbers are pure speculation and it wouldn't suprise me if I'm completely mistaken...

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#36

Post by pg »

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

This deal explicitly does not include any provisions for anyone to get an early look at the companies.

That said, anyone who speaks at YC dinners obviously gets an early look at the companies in that cycle, since the point of the dinners is to introduce the startups to these experts, and you will notice that 3 out of 4 of the investors already speak at the dinners:

http://ycombinator.com/w8speakers.html

So the investors didn't need to do this deal to get an early look at the startups, because (along with all the other speakers) most of them already had it.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#37

Post by sachinag »

pg wrote: post #33
sachinag wrote: post #7

Earlier quoted context omitted.

I also worry that it will hurt YC companies raising angel/VC money after YC. If these angels and Sequoia pass, won't other investors think that something is wrong with the company?

No. The deal doesn't give them any special rights or access to the startups. So nothing changes in that respect.

That's fantastic news; thank you, Paul!

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#38

Post by ivankirigin »

pg wrote: post #30
ivankirigin wrote: post #24

Earlier quoted context omitted.

People that put money into Sequoia get a lot of attention from Sequoia partners. If I were YC I wouldn't want to manage that.

It won't be any extra work. We already pay a lot of attention to all the investors in this deal, because they are the biggest investors in YC startups. In fact, that's how they were chosen.

That makes complete sense. Thanks

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#39

Post by mattmaroon »

chiffonade wrote: post #13
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.

It was more of a joke than a serious question.

Re: Y Combinator Gets The Sequoia Capital Seal Of Approval

#40

Post by mattmaroon »

pg wrote: post #34
gcheong wrote: post #17

Is this the first step towards a YC IPO?

No! Companies like YC don't go public, and even if it were an option, I wouldn't want to do it.

Anymore I'm always skeptical of anyone that would. People now think "if they're doing so well, why would they want to IPO?" Seems like a tremendous bad beat for investors.
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