

Ask YC: Can other investors join the round of funding with YC? - elfin2

We've applied for YC this round. We've had two [one very prominent angel &#38; one large seed fund] contact us asking if they could (maybe) invest.<p>We would love their money (small amounts initially - enough for Q2 2010 with growth), and we'd love the YC mentorship, branding and community.<p>Is there a way to make it work? Or do we just ask to speak to them after YC? Sorry for posting on an alt, with this stuff I'm really paranoid.
======
pg
It's not in your interest to have them join the same round. The valuation YC
invests at would be a bad one if we were only supplying money. So what we'd
recommend is doing another round after YC's at a higher valuation. If you were
in YC we'd obviously help you arrange that. Your call whether you want to take
the money during YC or have your potential investors come to Demo Day with
everyone else (assuming they don't already).

~~~
netsp
How would other investors react to this? It seems an obvious case of letting
one investor in at valuation A & another at valuation A+B with anchoring in
the relative value of the company at these two points.

Is the socially correct in the investment world?

------
barry-cotter
Why would you want to take both? It would seem to me that if people are
approaching you asking to invest you're in a fantastic position. The money
they're offering seems (Q2 2010) to be more than the standard YC offer but
what you're getting there is (mentorship + community + brand + Demo Day +
MONEY) whereas all you're guaranteed from the Angel/Seed Fund is money. You
will more than likely get mentorship as well but the community and brand are
not availabler outside YC.

It sounds like you're being offered ~double YC standard investment, but how
much stock your potential investors want is not mentioned.

You're obviously in a good position with people looking to invest in you
already but why would YC take on the pain of having others in on the round
with them on anything resembling an equal basis unless they think you're so
fantastic a bet that they'd be fools not to take it, like when Sequoia and
Kleiner (bastards who invest in patent trolls) Perkins went in together on
Google, which didn't need the money?

~~~
ALee
It is not that much money and if you can double the team and have a better
product by Demo Day, you may be in a better position.

------
ALee
From the YC startups I have spoken to, you can raise more money from outside
investors, but it cannot change the fundamental terms and amount you receive
from YC.

If you talk to YC, I'm sure they have a pretty good strategy on that since
they're very entrepreneur-friendly.

------
YuriNiyazov
Probably a direct e-mail to the YC partners would've been more appropriate

------
ph0rque
No reason you can't take both I think... but I'd wait for PG to weigh in.

