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Y Combinator narrows current cohort size by 40%, citing downturn and funding

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Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#111

Post by algo_trader »

spoonjim wrote: post #104
yawboakye wrote: post #102

YC has been irrelevant since they started admitting more than a handful of companies. It has almost become a rite of passage on to the fundraising circuit. It’s unclear what their admission philosophy is (e.g. p% of all applications?—I doubt). Or perhaps some fear of missing out dominates their thinking now? It would be interesting to know. Hopefully the current economic situation forces them to reconsider and perhap…

Why would they? They are buying into these companies at a $2m valuation which is absurd. It's a no-brainer move and almost nobody can rationally say no since YC is so powerful

How many of the YC batch are first money in? These were the original target audience ($500K is a great deal for these people).

I keep reading these YC stories, but if you dig in, many of them had significant pre-seed funding and product history.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#112

Post by [deleted] »

yawboakye wrote: post #102

YC has been irrelevant since they started admitting more than a handful of companies. It has almost become a rite of passage on to the fundraising circuit. It’s unclear what their admission philosophy is (e.g. p% of all applications?—I doubt). Or perhaps some fear of missing out dominates their thinking now? It would be interesting to know. Hopefully the current economic situation forces them to reconsider and perhap…

[deleted]

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#113

Post by paulgb »

chipgap98 wrote: post #107
mike_d wrote: post #11

Will YC also increase the money in by 9% since companies can do less with the same investment?

They just increased the size of the checks they give in the last year IIRC.

The check size stayed the same, but now they offer a second check for a MFN uncapped SAFE.

Regarding inflation, though, I’d posit that being a seed stage startup is cheaper than ever in spite of inflation, unless you’re super dependent on labor that the founders can’t provide. There is so much competition between service providers that a lot of things are free or heavily discounted in the seed stage, from banking to cloud services to legal. Plus a lot more automation and standardization around back-office stuff than there used to be (e.g. Stripe Atlas, Clerky)

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#114

Post by chrisseaton »

mojuba wrote: post #110
chrisseaton wrote: post #92

Earlier quoted context omitted.

> If I only had 10 minutes, I'd be nervous as hell and it would not give a true representation as me as a person and my project How do you sell your product to customers if you aren't able to pitch it in ten minutes?

Customers usually have more time to make a decision. When it comes to spending our own money, we ask around, we do some research by googling for independent reviews etc. before we buy an innovative product. So yes, I think a 10 minute presentation of any more or less novel/disruptive product is going to be largely a lie. Disruption is a complex process with a ton of important details. It is why as an entrepreneur you…

They'll take longer over deciding to say yes.

But if you're incoherent and awkward in your first ten minutes they'll probably have no issue saying no and walking away.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#115

Post by dustingetz »

balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

> Earlier folks / seed funds have more than enough money and even if they take hits on marks the reality is that they invest at such low prices they are still 'good', but (a) they don't know exactly what to buy because they don't know what the later-stage folks are in the market for and (b) they really don't know what prices the later-stage folks will pay for things (which directly impacts what they are willing to pay)... — https://twitter.com/lessin/status/1528750068932788225

VC is a https://en.wikipedia.org/wiki/Keynesian_beauty_contest

As a founder, you aren't paying the VC, the VC is paying you; you are the product and this meta-market is the actual real game you are playing. See: "Series A Exit Clause" – it's baked into your capitalization structure

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#116

Post by f0e4c2f7 »

balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

Or that you expect a downturn that will last more than 10 years. Check out how the 10 year T note has been performing against the 2 year. Markets are not optimistic about the long term.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#117

Post by urthor »

sbierwagen wrote: post #54
jerryjerryjerry wrote: post #49

Earlier quoted context omitted.

That's 0.39%, not sure if this is typical but seems pretty low to me. Anything we can learn from this number, or it's simply just a number?

It's widely discussed in the industry. I like the Matt Levine hypothesis titled "Private markets are the new public markets", briefly stated: that for a while there was a lot more money available for private companies than there used to be, thanks to ZIRP and megafunds like Softbank VF, and also more regulations and disclosures imposed on public companies, which on net makes it more attractive to stay private and not…

The cynical would assume firms financials the hyper-efficient public markets would mock prefer to swindle uneducated private investors.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#118

Post by [deleted] »

rmbyrro wrote: post #97
bigtunacan wrote: post #80

Earlier quoted context omitted.

VCs aren't directly funded by debt. They generally receive funding from accredited investors, and accredited investors are as a rule wealthy. Now when you are wealthy you make money off your money (through traditional means stocks/derivatives/etc...) but you want to get even more wealthy and have access to special discounted loan rates through things like guaranteed loans. So you go to the bank and say here's some of…

Well, in that case, everything is indirectly funded by debt

[deleted]

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#119

Post by DethNinja »

I_am_tiberius wrote: post #81
q-big wrote: post #77

Earlier quoted context omitted.

> I always find it amazing that applicants only have 10 minutes to present themselves. Consider this as a strong sign that YC is looks for companies that are an "easy sell" to VCs (the same holds for products that such companies produce). You can easily guess why they want that ...

They always say that what matters most to them is the founders. How can they learn to know people in 10 minutes?

I think VC funds operate on the basis of greater fool theory.

You don’t need a product or a capable team, you just need a shiny yuppie team, an easily marketable idea and then keep selling it to greater fools that will invest in Series B / C.

I do wonder how much money has been lost by Series B / C investors in this fundamentally broken market but then again mostly likely Series B / C investors are too rich and well connected to be effected by downturns, so it balances out itself.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#120

Post by nequo »

f0e4c2f7 wrote: post #116
balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

Or that you expect a downturn that will last more than 10 years. Check out how the 10 year T note has been performing against the 2 year. Markets are not optimistic about the long term.

There was that headline that half of all Americans are expecting a civil war. Or maybe it’s the on-going showdown with the CCP. Or Russia’s disqualification of itself as an energy supplier. Or maybe it is climate change?

Seriously, what’s driving these market trends, I don’t know.

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