
Paul Graham Shares Number of Y Combinator Companies Sold or Valued at Over $40M - dmor
http://mattermark.com/number-of-y-combinator-companies-sold-for-over-40m-by-year-funded/
======
sytelus
This numbers don't give away too much because of subjective nature of "valued
at" as well not actually knowing the mean or the variance, let alone the
nature of distribution.

However what is impressive is that if you were going to do startup with YC,
your chance of becoming significant company is about 10%. Due to nature of
power law in these things, I tend to think, may be about 20% of other startups
managed to become less spectacular but still successful and other 40% may be
just sustainable to make a reasonable living(lifestyle business) and rest had
to fold.

~~~
tomasien
Reddit, for example, sold for like 20-30 million so isn't included.

I know some other YC businesses that seem unlikely to ever be huge but are
profitable and probably will be as long as they want to be. Own Local has that
feeling to me, although perhaps it's actually going to be larger someday I
don't really know.

~~~
midas007
Perhaps a 3D graph would be interesting.

    
    
       - Batch year
       - Valuation
       - Years to reach valuation*
    

* First dinner to m&a, discounting prior traction/validation.

That way, gross valuation / year can be more easily elucidated.

------
chacham15
Note to dmor: I wouldnt put that copyright on the image. The data is shared by
pg, not you. The image itself without the data has little value. Therefore,
that copyright seems greedy and portrays a bad image to me. All in all, not a
big deal, but someone can take a detail like that a turn it into a PR
nightmere.

~~~
dmor
This is a really good point, I just copy/pasted the format for some old
slides. I'll update it, definitely not the intent

------
stevewilhelm
To put that in perspective, most of the first non-founder engineers couldn't
buy (outright) a 3br house within walking distance of Y Combinator's office
with their stock option proceeds.

~~~
pg
I _think_ what you're saying is that if a company were sold for $40m, employee
#1 wouldn't get enough to buy such a house. That would depend on how much
stock he or she got and how much he or she was diluted by later investments.
The cases I've seen fall on both sides of the line, but there are plenty above
it.

But also, we're not talking about 42 companies with valuations of $40m. $40m
is the lower bound.

------
confluence
In other news, women share how much their diamond rings were valued at when
they got married. Unfortunately, when they go to sell their cherished tokens
after their eventual divorce, they soon discover that diamonds aren't worth
nearly as much as they thought they were.

Indeed, they are often horrified to learn that the valuation of the diamond at
point of sale was horrendously overpriced through the use of psychological
arbitrage and cultural indoctrination, that the cost of their production is
surprisingly low thanks to copious amounts of slave labor and theft, and that
the wholesale price that the diamonds will clear at is so low as to be an
insult to their very dignity.

Oh, were we talking about startups?

I must have digressed into accurate land.

For anyone who's being a bit slow today:

    
    
        women = investors
        diamonds = startups
        marriage = first rounds
        divorce = likely failure of startup
        valuation at point of sale = optimistic valuation by investors at inception
        cost of production = ramen, servers and underpaid employees without equity
        wholesale price = true value of a startup on average

------
aashaykumar92
I'm glad pg also shared the percentage breakdown. If just the number of
startups based on funding year had been shared, YC's progress/success would
not be nearly as telling as with the percentages also shared.

------
johnrob
To put this in perspective, any company that has raised 10M or more is likely
to be valued at something near 40M. The numbers seem less startling to me
after factoring that in (my first reaction was that there must be a lot more
acquisitions than what we see in the news).

------
skosuri
Sold or valued at.

~~~
rutigers
pg in 2012 Sept

"The one thing we can track precisely is how well the startups in each batch
do at fundraising after Demo Day. But we know that's the wrong metric. There's
no correlation between the percentage of startups that raise money and the
metric that does matter financially, whether that batch of startups contains a
big winner or not."

([http://www.paulgraham.com/swan.html](http://www.paulgraham.com/swan.html))

~~~
pg
Almost none of these valuations are the result of investments after Demo Day.
These are later rounds, and later rounds converge on an ultimate valuation.

------
lucb1e
The current graphs don't say much. How about average/median/top valued company
by year funded 2 years after funding?

Say in 2005 company X got funded, then its value from 2007 should be used.

Of course 2013 and 2012 cannot be included then, but it's obvious that older
companies had a much longer period to build up value and thus the current
graphs don't say all that much.

~~~
philwelch
YC's investment thesis is that the whole game of investing in startups boils
down to investing in big stars. If you got into Google with an early stake,
you won. Medians don't matter: what matters is how many big stars you caught
since they'll pay for the rest many times over. So I think PG is measuring the
same thing he's trying to make.

~~~
pg
Though I wish we could claim credit for discovering that, it's really the
thesis of every startup investor.

------
LearnAndBurn
Must be nice. ;)

But on a serious note, I wonder how much that 2009-2012 bump has to do with
inflation or a lack of other opportunities in the market. Maybe I am out of
touch, but it seems like there are less and less places to put your money. Not
to suggest that startups are a bubble. The rise is probably due to YC becoming
a better filter, picking better horses in the race.

------
dkl
42 companies * $40M is $1.7B. Wow.

~~~
canistr
42 * $40M * 6% (average stake YC gets in company) = $100M

According to
[http://techcrunch.com/2013/10/25/y-combinator-13-7b-valuatio...](http://techcrunch.com/2013/10/25/y-combinator-13-7b-valuation/):
\- YC company valuations total $13.7 Billion \- 511 companies total

$11,000 + $3000 * # of founders = total investment in YC companies (let's just
go with 17k for 2 founders on average) = $17K

$17000 * 511 = $8.7M

$100M - $8.7M = $91.3M

Clearly a pretty good investment =P

~~~
nakkiel
Are you saying that YC only invests 11K per company plus 3K per founder?

~~~
namenotrequired
That's what YC says:

 _How much do you invest?

Usually $11,000 + $3000 per founder. So $17,000 for two founders, $20,000 for
three or more. We've also arranged for each startup to get $80k in convertible
notes automatically. The goal is usually to give you enough money to build an
impressive prototype or version 1, which you can then use to get further
funding._

[http://ycombinator.com/faq.html](http://ycombinator.com/faq.html)

------
YPetrov
I would be curious to find out why he chose $40M as the benchmark.

~~~
pg
There's a sort of threshold around there. A startup can raise at $20m after
Demo Day by looking really promising, but to raise at $40m you usually have to
be launched and growing consistently.

~~~
carlosrt
So presumably, companies that are on a ~$3M revenue run rate are a safer bet.
Assuming a multiple of 15.

------
mooted1
Is there a similar breakdown of companies YC lost money on?

~~~
zmitri
I'm sure they could, but it's not really relevant. It's more about the 2-3
Dropbox, AirBnB, Heroku like companies.

Think of it this way with Heroku:

YC gets 6-7% initially and probably ends up with close to 3% after Series A
and B. That's $6.2M on the $212M exit price.

A single exit like Heroku returns them enough to run YC for at least a couple
years and returned >10x for other investors.

So while you could show that, it doesn't really matter to YC or to investors,
because they have those 2-3 huge wins.

------
codex
Interesting: to a close approximation, the odds of a positive payoff from YC
(vs opportunity cost) is about the same as buying a California scratch ticket
--about one in ten.

------
jusben1369
Does anyone know how many are actually sold vs valuations?

~~~
pg
7 of the 42 were acquisitions.

~~~
jusben1369
Thanks

------
arbuge
Adjusting for time (takes a while to build the company), it seems like about
15-20% of YC's startups will eventually hit that number.

------
iamshs
So how does it compare to companies borne out of Y Combinator? That would be
interesting to see.

~~~
arikrak
Techstars publishes a fair amount of data too:
[http://www.techstars.com/companies/stats/](http://www.techstars.com/companies/stats/)

Then there's general studies of VC-backed companies. Not much available on
pre-VC companies though.

------
tannerc
Wow, that and the follow-up tweet are impressive. What happened in 2013
though?

~~~
pazimzadeh
Younger companies probably haven't had time to be bought yet! Or to be valued
as highly.

~~~
tannerc
Ah, of course. Thanks for clearing my brain fog.

------
jhh
Typical LISP guy: delimiting the pairs with whitespace - good enough :)

------
dmishe
Somebody, fix "OFY" in graph header.

------
bobbygoodlatte
Anyone know which two are the 2013 companies?

------
puppetmaster3
Names?

