
Introducing YC Series A Batches - runesoerensen
https://blog.ycombinator.com/introducing-yc-series-a-batches/
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d0m
I think that's exciting because raising an A is really stressful and time
consuming, and often as a startup you need to pivot and do short-term non-
optimal things to be able to raise it. If that same "non-bullshit" that YC is
using for seed-stage is used for the A, I'm sure it'll improve startups in the
long-term.

~~~
k__
"as a startup you need to pivot and do short-term non-optimal things to be
able to raise it"

Could you elaborate?

~~~
lbotos
I assume GP is talking about dedicating time effort and energy to round up the
money vs. spending that time effort and energy building the product.

At $small_startup_where_i_was_employee_3, when we were raising, it was the
CEO's full time focus, and cost a fair bit of money to generate the meetings,
be in the right cities, etc, etc. He was also responsible for a lot of our
marketing efforts (4 person co) so that took a toll, and shuffled onto others
shoulders where it wasn't our strength.

~~~
d0m
Yes, but also even the product/company vision sometimes need to slightly
change in the short-term to get those critical metric numbers to line-up with
VCs' expectation. I.e. getting a few important contracts to prove product-
market fit even if it's very costly for a small startup whereas it would have
been wiser to wait a bit, focus on the product and scale the team before
tackling these contracts.

~~~
k__
Ah okay.

Yes I saw such things too.

Company wanted to rise $4M and the investors wanted a "Cloud Product" with
>10k customers etc.

Which was ridiculous, because we needed the money for the stuff we already did
and it was an on-premis solution for like 10 big corporations.

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akharris
We think this is going to be an interesting new way for companies to raise
their A rounds. Here to answer any questions people have about it.

~~~
tosh
How does YC think about signaling issues (in general and specific to YC)?

~~~
akharris
Important question. We think signaling is a tricky subject, especially with
the number of VCs investing in As. There's a lot to unpack there, which I'll
write about in the future.

For YC - we're thinking actively how to prevent any signaling. That's why we
invest pro-rata in all of our companies in the same way.

~~~
misterbowfinger
What are "signaling issues"? Signaling that you're seeking a series A, or that
you're seeking a series A from YC?

~~~
fredophile
YC typically invests at the seed stage. If YC makes, or doesn't make, a large
follow up investment for some companies in series A it sends a signal to other
investors about what YC thinks about the company. Since YC has access to
information about the company's financials from already being an investor this
kind of thing can influence other investors to make, or avoid making, an
investment.

~~~
wasd
I don't believe this is an issue. YC's stance is to always participate in
their pro rata.

"We exercise YC’s pro rata investing rights in all follow-on priced financing
rounds, beginning with a company’s first priced round. At post-money
valuations equal to or below $300M, we exercise our rights in all companies
where we have a formal pro rata right."

From:
[https://www.ycombinator.com/continuity/](https://www.ycombinator.com/continuity/)

~~~
traek
Yes, and per further up in this comment chain the purpose of that is to avoid
signaling issues:

> For YC - we're thinking actively how to prevent any signaling. That's why we
> invest pro-rata in all of our companies in the same way.

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ttul
Dumb question: do you have to be a YC-backed company to participate?

~~~
akharris
Not dumb at all. It's something we thought about a lot. The program is just
for YC companies, though we'll continue to release information and learnings
for other people.

~~~
alfredallan1
Why?

If someone has “seeded” from personal funds/friends/family and gotten to a
stage of reasonable traction, why disqualify them from direct entry into
Series A, or artificially force them into Seed even when they’re clearly past
that stage?

~~~
lemiant
Because the Series A program is free (no equity) and YC, although very founder
friendly, isn’t a charity.

~~~
alfredallan1
No charity expected, being very founder friendly is sufficient. I must have
missed this bit - “Series A program is free”.

In any case, what I wanted to say is an independent Series A program (that
allows direct entry in addition to Seed Program graduates), parallel (and
similar) to the seed program, sounds like a good idea. Maybe that’s what this
experiment might morph into eventually.

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angelguy
Aaron, thanks for answering these questions.

What is the YC Series A program's advice to founders around giving round
allocation to prior investors? Is there an official stance on who should be
let in?

I've found with popular YC seed rounds that the founders turn to their YC
partners to ask who should get in. Extending this to A's is a bit scary from a
concentration of power standpoint.

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wasd
1\. Will there be any additional investment in the A outside of YC Continuity?

2\. How much do you think YC companies will raise post YC vs YC Series A?

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akharris
From YC? No.

Not sure what you mean by the second question. Are you asking about the size
of seed rounds vs. A rounds?

~~~
wasd
Sorry for the confusion. Yes, I was asking how much you think companies who
graduate form YC should raise (say seed) compared to companies who are
graduating from YC Series A.

~~~
akharris
That's heavily dependent on the company. There's a wide range that varies
because of stage, market, required milestones, team, etc.

Overall, though, the companies coming out of the A program will raise
significantly more than they did at seed.

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tamalsaha001
How does it compare to atrium.co? Are both of these for the same type of
companies?

