

How can I invest in Ycomb Grads? - efunder

Im looking for a way to invest in Ycombinator graduate companies. Im not looking to invest in a fund but rather the specific individual companies.
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patio11
Are you an accredited investor?

Do you have a net worth (assets minus liabilities) greater than $1 million
after removing positive home equity? In the alternative, have you had income
of $250k or more for both of the last two years with a reasonable expectation
of hitting that for this year?

If you are an accredited investor, you're an angel investor basically as soon
as you start calling yourself one, and what you now seek is "dealflow." Many
YC companies are, coming out of YC, quite hot properties with many people
attempting to invest in them, and probably need a fairly compelling pitch to
be allowed to give them money. This would often include an introduction from
someone the founders trust, a reasonable expectation that you'd be writing a
fairly substantial check (minimum viable check for a new angel is about $25k,
below that you need an extraordinarily high non-cash value to be worth the
founders' time in closing you), or accomplishments which demonstrated that
you'd add a lot of value to the company.

As to how to figure out which companies are raising after YC, you have access
to the same AngelList, TechCrunch, and Hacker News that every other angel
investor uses. A lot of the "hot" deals only appear on these retrospectively
-- to get in on them early enough for it to matter you have to have your ear
to the ground and know people. If that's a priority for you, I'd make it a
priority to have coffee dates with people who have lots of YC founders / etc
in their social circles and impress upon them that you're Good People.

If you're not an accredited investor, you'll find it very difficult to invest
in YC graduates unless you somehow identify them prior to YC. You're legally
capable of investing in private placements -- sometimes called "friends and
family rounds" \-- but part of the magic of YC is that YC companies have much,
much better access to money than F&F rounds and, as a result, they don't often
have to resort to raising them after YC.

This is orthogonal to the question "Should you invest in YC companies?" I feel
obligated to say that they are, universally, extraordinarily risky investments
with a high probability of going to zero, and if this would discomfit you, you
should not invest in them (or other tech startups).

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ameister14
If you're an accredited investor, there are actually two YC companies that
allow you to do this, FundersClub and Wefunder.

I believe both allow you to invest through a fund or individually, though you
don't manage the investment personally.

Otherwise, you first need a good network to know when these companies are
raising money and usually a track record of funding and helping companies
succeed or building them yourself.

If you're looking for private sale of shares, sometimes they come up on
sharespost.

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efunder
Thanks to you both for the responses. I live in NYC which is the difficulty in
really being able to network in Silicon Valley. I have made some investments
via funders club, and love the service, I was just looking for a way to invest
directly rather than just in a fund. Again Thanks for your time.

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chadkruse
Off-topic, but curious...would you be interested in co-investing(1) in the
nonprofit portfolio of YC?

(1) By co-investing I'm referring to a tax-deductible donation.

