
Things we've learned about Series As - akharris
https://blog.ycombinator.com/things-we-learned-about-series-as/
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yesimahuman
The analysis about execution quality of VCs gives me validation for being
frustrated a huge swathe of the VC industry. The bar is shockingly low. I'm
surprised the long tail gets in any deals at all given how lazy most of their
execution is. So many of them are just farming out associates to send spammy
drip emails from Salesforce.

This is such a niche market (how many investable companies are there?), I
don't see how it works for most of them at all. Every deal we did at Ionic
involved a very attentive and responsive _partner_ on the other end, and our
first conversation with that firm was always through a partner rather than an
associate/analyst.

I suppose we're in a capital bubble and when this long tail comes back with
awful returns for their LPs this issue might sort itself out.

~~~
akharris
I actually see this from a different angle. I think the bar is incredibly
high, and that many investors fail to clear it. It is high because, when you
see the best investors at work, it is blindingly obvious that they operate in
a different way.

The strange thing to me is that many investors don't realize this is happening
and just coast on the funds they've raised. Founders talk to one another
constantly. They know who works hard and who doesn't, and orient themselves
accordingly.

~~~
yesimahuman
Good point. The bar is high to get into great deals, the bar is low to
starting a fund right now.

And yes, shocking how many investors don't realize or care that founders talk
and have long memories!

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snarf21
I've seen this locally but a lot of investors aren't really in it for a
return. They want to talk about being _in_ to everyone at the country club and
in their family. It is assets they can (usually) afford to lose. It is the
same as buying a lamborghini, they want to be someone. Then if it does manage
to hit, "look at what a genius I am".

~~~
achillesheels
I agree. This mentality only encourages "sexy startups", i.e. those with mass
consumer appeal, over more fundamentally sound asset creation, e.g. smart
traffic and rail signaling software, which in turn incentivizes entrepreneurs
to build sexy startups - which lets be honest are mainly social apps these
days - then rinse and repeat.

~~~
EthanHeilman
Do people actually consider rail signaling software "unsexy"? It's like a
router for trains instead of packets. If I was an investor I would much rather
brag about my investment in freight train routing infrastructure than a tinder
for IoT users app.

~~~
burfog
Also not being an investor, I agree with your ranking. Even better would be
any sort of heavy industry. Elon Musk's stuff (rockets, cars, tunnels) is
mighty nice. Refineries, 100-ton forges, container ships, and similar are all
more impressive than software.

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x0x0
I read this as YC saying to investors that if you want to play in the YCA
pool, you will respond to emails and make decisions in a timely fashion. Major
props to them for this.

We raised an A on great terms, though we are not in YC or YCA. It was
surprising how many investors ghosted us, or promised timelines that didn't
happen, etc.

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jacquesm
Here is a nice tell tale to differentiate between the good and the bad: get a
partner to be present during all the initial meetings, negotiations and during
the dd phase. It will help tremendously in figuring out which vcs are really
in the market for you and which ones are just window shopping. Partner time is
expensive.

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ericand
> the importance of the batch itself

This may be the most profound statement about YC relative to the rest of VC.
YC provides founders with a founder community, which is very valuable and
fairly inexpensive to offer. Traditional VC resources are variable in quality
based on often based on expensive experts.

~~~
akharris
Even with how well I understand the batch - having been part of one and having
seen 5 years worth as a partner - I'm still amazed by how powerful the
structure is.

Part of what's cool is that the strengths of the batch have evolved and
changed over time as the environment changes.

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ericand
> In the last year, YC companies raised over $945mm across 95 Series As.
> That’s an increase of 50% over the prior year in terms of rounds done, and
> 71% in dollars raised

Anyone know if the batches were of similar size in terms of the number of
companies? It would be nice to have relative statistics (YC companies are on
average raising As more often and at higher amounts) than absolute ones which
could be just due to batch size.

~~~
akharris
Not quite sure what you're asking here. Could you clarify? Happy to try to
answer based on our data.

There was only 1 actual YCA batch last year. The other companies that
participated in the program did so in more of an adhoc fashion - basically
using the advice and knowledge we're building for their own raises.

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syllogism
> In the last year, YC companies raised over $945mm across 95 Series As.

Are you able to share the median deal size?

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lquist
Is the YCA program available to non-YC companies?

~~~
akharris
The program is only open to YC companies.

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mmayberry
What was the average MRR for YCA companies?

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akharris
MRR is only one components of some raises. Some of the companies had millions
of dollars a year in revenue, some had none.

The relevant metrics change depending on the company, industry, time since
launch, capital raised, geography, etc.

~~~
mmayberry
Interesting. I've always heard that $100k MRR is the minimum metric for an A
but I guess that only applies to SaaS companies. Looking forward to hearing
about YCA

~~~
akharris
It isn't even true there. This is one of the common misconceptions that show
up in blogs. There's no such thing as a minimum metric for an A - SaaS or
otherwise.

~~~
x0x0
(I'm not a vc)

We got an A with way less MRR because of who we had sold to. The quoted MRR
figures may be approximately correct for b2c or for b2b for smb customers. For
b2b enterprise customers, you can raise on way less. And you'll have to given
you have 6-12 month sales cycles.

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PaulHoule
Is this a program to give Series A rounds to selected companies that graduate
from YC?

~~~
akharris
No, it's a program to help YC companies raise As from investors.

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iaabtpbtpnn
Never trust anyone who abbreviates a million dollars with two Ms.

~~~
idoh
Disagree, MM is the classy way to do it. M can either mean 1,000 or 1,000,000.
For example, millimeter, or in advertising CPM, which is cost per mille. Using
MM disambiguates it.

~~~
erikpukinskis
Have you actually ever seen anyone use M to refer to 1,000?

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onlympk
What I'm about to write is very irrelevant but I see Facebook going down the
Theranos path. It will be a slow slow death for them. If not death, Facebook
will be crippled by the end of this phase.

