I think VCs are used to being the only guys on the block and don't like that they aren't fully in control any more. It's the same thing that has happened to Wall St. But different in that the VCs had even more control and some back room deals going. YC isn't the the real issue. They are providing a good education and strong ideas which help to prove them to be the best of all the accelerators out there today.
Venture Firms Fret as Y Combinator Soars
31–40 of 62 posts
Re: Venture Firms Fret as Y Combinator Soars
#32Network effects at work. VCs will probably not find it amusing if - and of course when - they realize that they have been disrupted. But it is a funny kind of poetic justice. Everything, even capital markets can be disrupted (or at a minimum greatly shaken up) by a dedicated player with a technological advantage. And once the network effects kick in you're going to have a very hard time gaining back lost ground. I pr…
> They'll be so flush with money that the only reasonable way to use it will be to do their own series 'A'. The other way to use that money would be to have gigantic batches. Remember, pg and sama have said that they're trying to build something akin to a university with Y Combinator. Using their money to do series A's instead (which is what other accelerators are already doing) would just be so conventional, and not…
This. I'd think batches with 200 (500? 1000? startups) will come before Series A's. If only on principle.
Re: Venture Firms Fret as Y Combinator Soars
#33This “signaling issue” is a huge problem, by the way—accelerators that do the Series As for their top 3 companies deeply wound all the rest. - Sam Altman How is this different from a VC firm like Andreessen doing Series As for their top 3 seed companies? Isn't signaling part-and-parcel of the startup economy? Why should YC be worried about signaling when a firm like Andreessen isn't?
Because YC is involved with a startup for 3 months far more intimately in a very early and telling stage. a16z, with all it's due diligence, won't know a startup as well as YC does at that stage.
Re: Venture Firms Fret as Y Combinator Soars
#34I hope genius isn't the future of writing, that was painful to read.
I couldn't even get through it
Re: Venture Firms Fret as Y Combinator Soars
#35YC doesn't have anything like a monopoly on great startups. If investors can't find their own great startups they don't deserve to be successful as investors.
What all SV investors should be worried about is crowdfunding. Most of them don't have anything to offer beyond money and that doesn't count for much if users pay millions in advance.
Oculus took VC money but you can bet it was on incredibly advantageous terms due to their millions in kickstarter revenues. A16Z was merely the strongest among the weak and paid for the privilege of investing.
The fact that Oculus was immediately acquired for billions by a company Marc Andreessen sits on the board of is not necessarily a good outcome for the world. A fully crowdfunded Oculus may never had chosen that route.
Re: Venture Firms Fret as Y Combinator Soars
#36I don't use Rap Genius often, so I almost missed sama's responses. Be sure to click on the annotations to see them.
I use Genius almost exclusively for its rap annotations, so reading news on this platform felt strange to me. While I can definitely see its merits for lyrics/poetry, I'm not sure how much I like it in this context. I think that expository/news articles should be written well-enough that annotations (other than hyperlinks, I guess) are unnecessary.
I actually found the UI excellent when reading this. You get to see counterpoints and clarifications inline, and you can see exactly what phrase or sentence is being addressed.
The only improvement I could see is if it was more prominent who is giving the verified annotations. It's listed twice at the top but they're easy to miss. Might be nice to have each person's avatars and names take up the side next to the first few paragraphs.
Re: Venture Firms Fret as Y Combinator Soars
#37I don't think traditional VC firms are competing with YC at all. There are two "black holes" in venture capital right now. One black hole is YC + angel investment. When you're getting started, it's pretty much standard practice to go through YC and/or raise seed capital from angels to get your startup off the ground. The other black hole are a few top VC firms (off the top of my head, a16z and Sequoia). These firms p…
uhhh, I think you mean "funds" not "firms." Defining 3 regions and pigeon holing firms is too much of a simplification of VC markets.
Firms raise funds, that can target specific markets/verticals, as well as company size/maturity.
a16z is a firm. They have multiple funds, including a seed fund, surprisingly named "Seed" which competes directly with YC.
Some Firms have only 1 fund. Firms manage and guide their funds, and charge a management fee. While managing a fund is a largely personal intensive business, much like consulting, there are some economies of scale which is why many Firms will have multiple funds. This also further protects against risk.
YC and other accelerators are Firms, potentially with multiple funds, but all of their funds are at the low/angel end.
Re: Venture Firms Fret as Y Combinator Soars
#38"So it shouldn’t be surprising that venture capital firms are starting to worry that YC might start elbowing into the capital allocation part of the businesses."
It seems like YC currently doesn't have the whole Investor Relations infrastructure (or mindset of dealing with pensions) to get into the mainline VC business. I do think they are protecting their franchise against poor VC behavior though.
Re: Venture Firms Fret as Y Combinator Soars
#39I don't think traditional VC firms are competing with YC at all. There are two "black holes" in venture capital right now. One black hole is YC + angel investment. When you're getting started, it's pretty much standard practice to go through YC and/or raise seed capital from angels to get your startup off the ground. The other black hole are a few top VC firms (off the top of my head, a16z and Sequoia). These firms p…
Having multiple stages of the process is perfectly ok. The risk is offloaded to those who can bear it. Small teams of very young people can take home run like risks by bootstrapping. YC diversifies the Angel risk by giving lots of advice and structure to large groups of firms. The top VC firms provide growth capital, but even there it's not about sure things. Many investments lose money, but it's not as risky so they can have relatively fewer investments with much bigger bets. By the time it's a so-called sure thing, firms have done their IPO.
Re: Venture Firms Fret as Y Combinator Soars
#40I don't think traditional VC firms are competing with YC at all. There are two "black holes" in venture capital right now. One black hole is YC + angel investment. When you're getting started, it's pretty much standard practice to go through YC and/or raise seed capital from angels to get your startup off the ground. The other black hole are a few top VC firms (off the top of my head, a16z and Sequoia). These firms p…
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