

The Best Deal In Startup Land - jmorin007
http://www.avc.com/a_vc/2009/09/the-best-deal-in-startup-land.html

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breck
Right on. The YC experience is worth so much more than just $15k-25k. It's
like giving some stock to part time consultants. Except the consultants are
none other than PG, Jessica and Trevor, and they pay you $15-25k! Then you
also get the seal of approval and doors instantly open. And you get to learn
from others' mistakes and triumphs as you see first hand 20+ other startups
thrive and die. Plus you get access to the YC alum network.

PLUS, there are virtually no costs of the YC process. You fill out an
application: 1-2 hours. You interview: 10 minutes + travel time. You fill out
some paperwork: 3-4 hours. Boom, you get a check and have a Delaware
corporation. Maybe you don't get in and you're out a few hours of work.

Compare that to the fundraising process with anyone else. Of course, I'm
preaching to the choir here. But I just wanted to add another data point.

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jhancock
"You could say that giving up 6% for $25k is a bad deal, that it values the
business at less than $500k"

I'll take it further. This is a good deal without the mentoring, although I
can't imagine anyone finding your startup valuable without you taking good
mentoring. Who is the kook that thinks a startup with no finished product, no
users, certainly no "customers", so clearly no proven biz model, is even worth
$500k?

Does Sarah Lacy have any first hand experience at the helm of a start-up?
Based on her opinion I can't imagine so. As a person that has been doing
startups for 20+ years, I can say its a no-brainer to give up 6% for a little
cash and proven leadership.

~~~
jhancock
I'll add two more data points to 6% being a reasonably small amount.

1 - I had a great mentor years ago. His software company, which is still
running strong for 20 years, gave 5% to each of several key employees (they
had good salaries as well). He thought it a no-brainer and his success shows
it.

2 - I had an investor in '98; things went sideways. The investor received both
IT product/services from my startup plus 5% of my company in return for
carrying my costs that year. When it became clear we needed to part ways, I
called my old mentor to ask what to do. He told me to let the partner keep the
5% even if I didn't have to (I didn't and didn't even have to fight about it).
He told me it was a small amount, it would get diluted over further
investments and if those further investments never materialized, it meant the
company is dying so the 5% is worthless anyway.

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callmeed
As the YC FAQ states: _"Half (maybe more) of the startups we fund don't need
the money. ..."_

I'd really like to be a part of YC someday soon–and I definitely wouldn't need
the money. My problem is finding time to be away from my current company long
enough to focus on and launch a new idea.

When I read that Sarah Lacy comment last night, I thought it was one of the
more short-sighted comments I'd read on TC. Is that par for the course for
her?

~~~
thaumaturgy
> _My problem is finding time to be away from my current company long
> enough..._

I don't know if this is _your_ company you're talking about, or just a regular
type job working for someone else. If it's your own company, then so far I've
found that trying to clear time for a YC startup is forcing me to formalize
and replicate other aspects of my current business, which is really good for
it. So, it might be worthwhile to push for YC anyway; if nothing else, your
existing business will thank you for it.

~~~
callmeed
Yes it is my own. And that's probably what I need to do. My hope was to take a
3-6 month "sabattical" this year, be off day-to-day stuff, and work on new
ideas. Unfortunatley, I woke up the other day and realized it was September :)

Good advice, thanks.

~~~
jjs
> Unfortunately, I woke up the other day and realized it was September :)

I hate it when that happens. :/

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wheels
The usual reason that you don't want to give up too much equity is because
you're selling control of the company -- not because you're worried about
losing a small percentage of your exit. The difference between $10.7 and $10
million isn't all that worrisome.

I don't see much of a reason to worry about that in the YC case. I'm not
worried about them trying to take over the board or block an exit or forcibly
change a product strategy.

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meterplech
certainly the ycombinator clones are interesting and may even begin to make a
difference. But, if the value proposition of ycombinator is essentially PGs
talent, help, and networking, how much can the knockoffs really give you.

That being said, as with the author, it is even more clear to me ycombinator
itself is the best deal out there

~~~
ig1
There are plenty of other talented and well connected angels out there. You
have to remember that before yc PG was just another dot-com millionaire (well
he had the essays + lisp fame + anti-spam fame but in business terms not that
much).

It wouldn't make much sense to go to YC if for example you were building b2b
enterprise apps or targeting non-english speaking market where YC lacks
expertise, but other YC-style programs might be much more suitable.

~~~
gruseom
_It wouldn't make much sense to go to YC if for example you were building b2b
enterprise apps_

On the contrary, I'm pretty sure YC are not only interested in such startups,
they've funded some.

~~~
jasonlbaptiste
viaweb made software for businesses to setup shop online. though it was not a
b2b app, it was not not a cutesy consumer app.

