If you're accepted to YC, can you negotiate the percentage? • Hacker News Board

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

#21

Post by thomasptacek » Fri, Oct 05, 2007, 9:16 PM UTC

carpal wrote: post #20

thomasptacek wrote: post #18

Earlier quoted context omitted.

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…

Just to reiterate, an idea that goes from 100% to 25% based solely on Paul Graham is not a good idea.

To restate the original point: I feel like some of the people on this forum approach starting a business the same way they approach applying to college, or to grad school. That is not how it works. Your success is not gated on the "grownups" in the admissions office, or the department, or Y Combinator, making a decision about you.

If you catch yourself thinking about it that way, stop. Even if you get your 2 month's consulting dollars out of Y Combinator, nothing else in business works that way. There's no professorship to apply to once you get funded. You actually have to engage the market and win.

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

#22

Post by jdavid » Wed, Oct 10, 2007, 2:32 AM UTC

pg wrote: post #16

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?

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.

I would be really curious about those dollars, and what percentage get an investment of 1 million plus.

6% seems like a 200% profit if each yc startup generates a 1 million dollar investment.

If the VC deal rate is closer to 1 in 10 or 1 per year, it looks like you need one $10 million dollar deal a year, each of which needs to have a potential of $250 million eval, or $25 million a year in revenue before the VC will be interested.

So my question is, if a team can demonstrate "real" projections with lower than average risk, and demonstrate a 2 year projection of greater than $25 million a year would you consider an offer of less than 6%?

My second question is, since we are in the Midwest, "What exactly is a rockstar?" ;-) We have Billy Corgan, and Garbage to be proud of, but the coasts seem to be more keen on the idea of the "rockstar," so, what are the characteristics of a "tech" rockstar?

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

#23

Post by jdavid » Wed, Oct 10, 2007, 2:34 AM UTC

icky wrote: post #15

myoung8 wrote: post #13

Earlier quoted context omitted.

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.

but the % share is a good reason to turn down the deal if you have other options. I just think it's to know what yc investors are told behind the curtain, and how much you are worth. It's nice to know what expectations you should live up to.