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The New Deal

blog.ycombinator.com

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161–170 of 194 posts

Re: The New Deal

#161

Post by thatthatis »

nlh wrote: post #44

This seems great - simple, better terms, higher valuation. Kudos @sama and YC. Stepping back a bit, it's also a sign of the times -- especially given the tone of the last paragraph, it's clear there's pricing pressure on incubators/accelerators and the competition is heating up a bit. There are more competitors in the space, valuations are rising, and YC is adjusting accordingly. This isn't a good or bad thing per se…

I have trouble deciding which part I like more: the simplicity or the better valuation.

Unanimously positive move.

Re: The New Deal

#162

Post by mikeg8 »

IgorPartola wrote: post #146
eloff wrote: post #125

Earlier quoted context omitted.

What about a startup that comes to YC with a product and customers already as opposed to just an idea? Surely they give up less than 7% equity? The risk for YC is maybe an order of magnitude less and the equity % should reflect that lowered risk (not saying .7% either, but lower.)

Why would a company like that approach YC and not raise a round on their own? Or better yet, reinvest every penny back into the business without giving up any equity? Won't these companies just self filter?

The 120k for 7% is a great middle ground. Trying to raise that amount on your own isn't going to be easy or net you nearly the same valuation as this deal and re-investing every penny is wise but it may take several months/a year to equate to 120k.

Re: The New Deal

#163

Post by mikeg8 »

diziet wrote: post #68
ebabchick wrote: post #43

How can Teespring afford / justify giving every non-profit $50k?

They are a company with real revenue that's growing and they think the publicity will sort of make up for it, so they don't end up losing too much on it. If yc does 5 nonprofits per batch, $500k is not a lot of money.

I think your math is off. 5 NP's per batch * 50k = 250k from teespring which makes your point even stronger.

Re: The New Deal

#164

Post by mikeg8 »

nedwin wrote: post #144
jonknee wrote: post #57

Earlier quoted context omitted.

YC is meant for very early stages (with an idea and not much else). Stripe wasn't worth much when it was just an idea--a better payment gateway--but is now worth a lot because they executed. YC wants to help teams better execute and starts things off with enough money to let the team live in the Bay area for a short time.

More and more they're funding startups that have traction, customers, revenue - sometimes substantial revenue.

Can you cite a few examples of companies they funded with substantial revenue? I'm very curious to learn about which ones they were.

Re: The New Deal

#165

Post by tomasien »

wellboy wrote: post #136
chaseadam17 wrote: post #112

Earlier quoted context omitted.

They're not asking for anything in return.

Startups for Startups, they will get back way beyond what they gave away. Great things will come to you if you're not asking for anything in return, because people do remember.

Oh totally! And I hope it was ultra-clear - I wasn't asking because I ASSUME they wanted something in return, but rather because that's a proposition I've never heard before. They're giving them $50k not $50k in tee-spring right? Or is it $50k in tee-spring? I guess that's my question, but either way - too cool! Proud of those guys, right thing to do.

Re: The New Deal

#166

Post by mikeg8 »

tptacek wrote: post #60
logicallee wrote: post #51

Earlier quoted context omitted.

> But $120k is just not a lot of money. The real value of YC is the signal that getting accepted sends to other seed investors. This idea (first quoted sentence) needs to die. It is toxic to the early-stage ecosystem. Any amount of money is a ton of money. Period. You can ignore the hustling that Jobs or Zuckerberg did for literally a couple of thousand dollars - read Zuckerberg's contracts at the time he was at Harv…

Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.

An idea-stage startup should not be paying a FTE 120k. That is lunacy and engineers need to start to understand this. More equity, lower salary until there is money coming in would help more companies survive longer while they look for product-market fit.

Re: The New Deal

#167

Post by dangoldin »

rpgmaker wrote: post #156
LukeWalsh wrote: post #96

Earlier quoted context omitted.

I think it's also a great deal for first time founders and people who aren't all that familiar with startup funding. $120k for 7% is a lot clearer than $17k + $80k for 7% + converted shares no cap no discount. I also think this is great news for what it will force other accelerators to do. Many people out there claim to copy YC's model with much less friendly terms on the convertible note. This puts everything out in…

It's way clearer. Is there a book or a resource on the web to learn about startup funding?

Not sure if you meant a book on the web but I liked Venture Deals - http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalis...

Re: The New Deal

#168

Post by tptacek »

mikeg8 wrote: post #166
tptacek wrote: post #60

Earlier quoted context omitted.

Sorry, I just don't agree. 120k barely makes expenses for 1 FTE. Not only that, but it's also an amount of money that a strong freelancer can generate on top of living expenses in a particularly well-utilized year.

An idea-stage startup should not be paying a FTE 120k. That is lunacy and engineers need to start to understand this. More equity, lower salary until there is money coming in would help more companies survive longer while they look for product-market fit.

I don't doubt that you're right about this, but I'm using the (lowball) estimate of the cost of a single developer as a benchmark for the amount of money we're talking about. Also: I'm not sure what you call someone who takes half salary in exchange for equity. It's probably not "cofounder", but "employee" doesn't fully capture it either.

Re: The New Deal

#169

Post by mindcrime »

rpgmaker wrote: post #156
LukeWalsh wrote: post #96

Earlier quoted context omitted.

I think it's also a great deal for first time founders and people who aren't all that familiar with startup funding. $120k for 7% is a lot clearer than $17k + $80k for 7% + converted shares no cap no discount. I also think this is great news for what it will force other accelerators to do. Many people out there claim to copy YC's model with much less friendly terms on the convertible note. This puts everything out in…

It's way clearer. Is there a book or a resource on the web to learn about startup funding?

Check some of the books and links in this list.

https://news.ycombinator.com/item?id=7429222

Re: The New Deal

#170

Post by crystaln »

While going through YC for no money and 7% would probably be worthwhile for many startups, simply for the exposure and advice, I know for a fact the ostensibly terrible terms have deterred many good applicants. I tried for years to apply to YC with a partner who insisted on not taking such terms. While I think he was wrong (and perhaps that signaled some other problems with the partnership,) I'm happy to see the issue go away. A valuation of $1.5-$2M is quite fair for an early stage startup, particularly with the value-add of YC.
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