

Ask HN: Is the Y Combinator model dead thanks to Kickstarter-like crowd funding? - tav

As of a few moments ago, the Diaspora project passed $50,000 — five times what they'd asked for, and it seems that people are still giving... there's 20 days left for them to keep doing so!&#60;p&#62;It's been exciting to see them double their "investment" in less than 24 hours and proves that it is &#60;i&#62;possible&#60;/i&#62; to crowdfund startups.&#60;p&#62;So my question is whether such successes totally invalidate the Y Combinator model?&#60;p&#62;And, on a related vein, what sort of support infrastructure would people like to see with the crowd funding + social media approach?&#60;p&#62;Thanks!
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samdk
I think you're missing a huge benefit to having investors, which is that
you're able to consult with them and get advice, and they have a very real
motivation to give you good advice and to help you if they can.

YC also has the benefit of a large (and pretty successful) alumni network, and
a lot of the YC people I've seen talking/writing about their YC experiences
have listed that as a huge positive.

 _edit:_ Nothing's stopping you from applying to YC too, but the original
question was whether or not this invalidates the YC model, and this is why it
doesn't.

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doron
Well they are actually getting investors at the moment, and they might get
sage advice by people who are willing to do so on the net.

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jurjenh
I suspect the valuable advice might well be buried in the noise, and take more
time to sort out than you would get if you were just dealing with a couple of
big investors.

That, and bigger investors have more at stake, so it is in their own interest
to see you do things right quickly.

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jacquesm
Yes and no. Others have already said 3 times now that the value of YC is not
in the money, and I agree with that for the most part. But what Kickstarter
does is it allows you to 'divorce' the advisory/networking roles and the
funding roles.

There are plenty of people that can mentor but they may not be in a position
to fund for a variety of reasons (for instance not being an 'accredited
investor'). Like this you could actually hire them to give their advice,
rather then to come to them for _both_ money and advice, as well as a network.

So kickstarter may very well spell the end of the incubator, but via a
completely different route.

Companies like YC thrive on the scarcity of the combination of people with the
money to invest _and_ the time to mentor.

If Diaspora fails the model will likely collapse though, they're a poster
child for this model now, they had better succeed or die (figuratively
speaking of course) trying.

No going back for them.

edit: and don't underestimate the power of being 'YC funded' for follow up
rounds.

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rantfoil
Kickstarter is a great thing to push people to get things done that they might
not otherwise do on their own.

YC is a great way to kick your startup into high gear as well.

But that's where the similarities end.

They are not substitutes for one another. YC is also not a company. It is a
pre-seed stage venture firm (with amazing advice from PG, Jessica and co) and
a network of entrepreneurs who help each other.

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jacquesm
I don't even think that it is inconceivable that a group funded through
kickstarter knocks on YCs door for guidance in return for 5% + some more
dough. The chances of success have already improved because of kickstarter, so
kickstarter could be a pre-pre-seed stage idea validator, to see if something
has legs or not before you even apply to YC.

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icey
No.

YCombinator's value isn't the money, it's the vast network of connections and
deep experience they can provide.

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_delirium
While true, a different interesting question might be: will crowdsourced
funding make angel investors who aren't YCombinator less in demand? I don't
think every angel investor has the same reputation/connections YC has, and
some really do bring mainly money to the table.

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icey
I would assume it would impact those investors. Investors without connections
are sometimes more of a pain in the ass than not having money at all.

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brc
One seems to be a way of throwing some loose change at an idea you think might
be neat. The other is a carefully developed way of identifying and assisting
projects that have a good chance of developing into profitable businesses.

Losing sight of the fact that someone has to actually make money from these
things at some point is precisely what gives you internet bubbles. From
everything I've read about YC it's all about focusing down to build something
that someone wants to buy. That's a world away from accepting donations from
people who think something cool might come of it.

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mikeleeorg
Aside from the personal consultations, experience, expertise, and connections
that YC offers over Kickstarter (which are all vastly important), I suspect it
is much more difficult to raise funding through crowd funding than through
angels & VCs, relatively speaking.

There's also the question of whether or not they'll know how to most
effectively use that funding. Consultation from experienced people like those
at YC would help there too.

Diaspora is an edge case. All the press they've gotten have catapulted their
popularity enough to raise this amount. And more power to them too; they have
a valiant goal and I hope they can execute on it well.

But I wouldn't try to raise funding for a for-profit startup through crowd
funding, unless perhaps your startup has an apparent, believable, and widely-
desired benefit to society. I'd love to be proven wrong, but this argument
only has a sample size of 1 so far.

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percept
In this case people are voting with their dollars. Most startups won't have
the benefit of a controversy generating a wave of press behind their cause.

Are there already sites that take pledges for software projects (successfully;
I think there have been failed attempts)?

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ig1
The value of Y Combinator isn't the money.

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stuntmouse
One obvious disadvantage: with Kickstarter, you're ploppping your business
plan on the net at a very early stage. Makes it quite easy to poach.

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jerermy
Seems like a very relevant debate. Indiegogo and Kickstarter seem to be paving
the way for micro investing.

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fookyong
it's not really "investing" though, is it. it's giving people money. there is
no exchange of equity involved in the kickstarter transaction (nor is it
allowed, according to their TOS, I think).

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joubert
Wave of democratization. Too early to tell.

