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If you're accepted to YC, can you negotiate the percentage?

news.ycombinator.com

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Re: If you're accepted to YC, can you negotiate the percentage?

#11

Post by dhouston »

in general, the median's around 6% and i think is also the most common, and i didn't encounter anyone who had negotiated it down. i don't think there's a formula. we had a working demo, and thousands of lines of code, but got the same deal as other groups who just had an idea.

unless the % seems way out of kilter, it's probably not worth optimizing this or cutting yc down (after all, they're making rapid fire phone calls down a list of people who would gladly take your spot. things like your option pool and follow on investments will be the dominating factors in your dilution anyway.) they definitely earn their chunk, and contribute _vastly_ more than the equity they take, even at the highest end.

Re: If you're accepted to YC, can you negotiate the percentage?

#12

Post by dhouston »

bls wrote: post #4

The easiest and fasted way to lose at negotiating is to ask "is this negotiable?". When you negotiate, you are supposed to be convincing the other side to give you what you want on the terms you want. If, instead, you come into the negotiation looking powerless, you are going to end up with no deal or--worse--a bad deal. You get 15 minutes or so to present your idea. One minute of that presentation should be about ho…

i wouldn't bother trying to push the $5k+$5k*n . i think that precedent is pretty much set in stone. and even if you tried, the extra cash wouldn't matter much, and you'd more likely piss pg off than anything else.

Re: If you're accepted to YC, can you negotiate the percentage?

#13

Post by myoung8 »

jdavid wrote: post #8
pg wrote: post #3

No. You can turn us down though. (Two groups did, both very early on. I don't know what became of them.)

paul, if there is a standard process, is the % based on the number of founders, an evaluation, or both?

Read the instructions first...

...decisions will include the amount we'll invest and the percent of the company we'd want for it. We usually invest $5000 + $5000n, where n is the number of participating founders (i.e. 2 founders get $15,000, 3 get $20,000), in return for between 2% and 10% of the company. The median is 6%.

Re: If you're accepted to YC, can you negotiate the percentage?

#14

Post by thomasptacek »

carpal wrote: post #10

The key to this is to discover the golden key of negotation: BATNA- "Best Alternative To a Negotiated Agreement" Your BATNA: To keep doing what you're doing, and not get rich by fulfilling your dream. YC's BATNA: To fund someone else that is about 99% as good as you. You have a lot more to lose by walking away, therefore YC holds an incredible amount of power in the negotiation.

It really freaks me out that there are people on this board who think the BATNA for a founder in the YC negotiation is "give up on their dream".

Re: If you're accepted to YC, can you negotiate the percentage?

#15

Post by icky »

myoung8 wrote: post #13
jdavid wrote: post #8

Earlier quoted context omitted.

paul, if there is a standard process, is the % based on the number of founders, an evaluation, or both?

Read the instructions first... ...decisions will include the amount we'll invest and the percent of the company we'd want for it. We usually invest $5000 + $5000n, where n is the number of participating founders (i.e. 2 founders get $15,000, 3 get $20,000), in return for between 2% and 10% of the company. The median is 6%.

Most importantly:

The money itself is NOT the reason to sign up for YC.

Re: If you're accepted to YC, can you negotiate the percentage?

#16

Post by pg »

jdavid wrote: post #8
pg wrote: post #3

No. You can turn us down though. (Two groups did, both very early on. I don't know what became of them.)

paul, if there is a standard process, is the % based on the number of founders, an evaluation, or both?

The percentage is based on a very rough estimate of the startup's prospects. If the founders seem like superstars and have been working on it for a while, we might ask less than 6%. Whereas if the company seems riskier we might ask for more.

We should go back and see if the predictions implicit in the offers correlate at all with how the startups have done.

Re: If you're accepted to YC, can you negotiate the percentage?

#17

Post by carpal »

thomasptacek wrote: post #14
carpal wrote: post #10

The key to this is to discover the golden key of negotation: BATNA- "Best Alternative To a Negotiated Agreement" Your BATNA: To keep doing what you're doing, and not get rich by fulfilling your dream. YC's BATNA: To fund someone else that is about 99% as good as you. You have a lot more to lose by walking away, therefore YC holds an incredible amount of power in the negotiation.

It really freaks me out that there are people on this board who think the BATNA for a founder in the YC negotiation is "give up on their dream".

I never said they would give up on their dream if they declined YC.

They just have a smaller chance of it happening. As a YC-funded group, you have a 100% chance of pursuing your dream. If you aren't funded by YC, your chances of that are significantly smaller.

Re: If you're accepted to YC, can you negotiate the percentage?

#18

Post by thomasptacek »

carpal wrote: post #17
thomasptacek wrote: post #14

Earlier quoted context omitted.

It really freaks me out that there are people on this board who think the BATNA for a founder in the YC negotiation is "give up on their dream".

I never said they would give up on their dream if they declined YC. They just have a smaller chance of it happening. As a YC-funded group, you have a 100% chance of pursuing your dream. If you aren't funded by YC, your chances of that are significantly smaller.

I am utterly skeeved out that there are people in this forum who think their "chances of pursuing their dream [startup]" are lessened by not getting "funded" by YC, and that their "chances of success" with that startup are significantly reduced.

As a serial startup founder with 2 VC backed companies behind me (one as a founder) and 2 bootstrapped companies (both as a founder, one current, thriving, and multiple years old), let me respectfully call bullshit upon you.

To support my calling down of The Bullshit upon you, let me focus your attention on two completely obvious facts of the industry:

Fact the (1)st: the Overwhelming Majority of thriving web startups are not YC-funded.

Fact the (2)st: the Overwhelming Majority of YC applicants do not collect $16,000 (one solid month of consulting dollars for a skilled developer) from Paul Graham.

If your dreams don't survive not collecting a vanity round from Paul Graham, your dreams are weak and don't belong in the industry to begin with. I leave you with that thought.

Re: If you're accepted to YC, can you negotiate the percentage?

#19

Post by thomasptacek »

carpal wrote: post #17
thomasptacek wrote: post #14

Earlier quoted context omitted.

It really freaks me out that there are people on this board who think the BATNA for a founder in the YC negotiation is "give up on their dream".

I never said they would give up on their dream if they declined YC. They just have a smaller chance of it happening. As a YC-funded group, you have a 100% chance of pursuing your dream. If you aren't funded by YC, your chances of that are significantly smaller.

By the way, you didn't say they WOULD give up their dreams. You said they SHOULD. Thank you for introducing the idea of BATNA to the discussion.

Re: If you're accepted to YC, can you negotiate the percentage?

#20

Post by carpal »

thomasptacek wrote: post #18
carpal wrote: post #17

Earlier quoted context omitted.

I never said they would give up on their dream if they declined YC. They just have a smaller chance of it happening. As a YC-funded group, you have a 100% chance of pursuing your dream. If you aren't funded by YC, your chances of that are significantly smaller.

I am utterly skeeved out that there are people in this forum who think their "chances of pursuing their dream [startup]" are lessened by not getting "funded" by YC, and that their "chances of success" with that startup are significantly reduced. As a serial startup founder with 2 VC backed companies behind me (one as a founder) and 2 bootstrapped companies (both as a founder, one current, thriving, and multiple years…

Yes, your chances of success are reduced if you do not get funded by YC. If they're reduced enough for you to quit, you shouldn't be doing it anyways.

I define "success" as being able to quit my day job and work on the startup full time. Anything after that is gravy.

My chances of being able to do that if I'm accepted to YC: 100%

My chances of being able to do that if I'm not accepted to YC: 25%

The 25% is more than enough to keep me going and to keep my inspired. But I'd still have a better shot if I got accepted by YC.

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