

Incubator angst about YC - kingkawn

I'm on a listserv for business incubators, and Y Combinator came up from one of the participants:<p>"While I do not agree with the value given by Y Combinator and the type of Angel Fund/Incubators they have spawned, my original comment was meant to be more of a wake up call to those incubators that develop companies on the Series A track.<p>If someone wants to go to a Y Combinator and take their deal, then they should.<p>There are 2 needs every seed company will face after starting: (1) Validation for their product / service and (2) money.<p>The Y Combinators promote their advantage in getting Validation because of the high profile network of the Fund founders and their tremendous connections within the Validation community (corporations, other startups, etc.).<p>The Y Combinators promote their advantage in getting Money becuase of the high profile network of the Fund founders and their tremendous connections within the Venture community.<p>And now, you are seeing traditional VC Funds aligning with Y Combinators (Sequoia/Y Combinator and Spark/TechStars) to make the Validation and Money connection even more realistic to promote. This development is very logical for both parties - Y Combinators get believable partnerships to show potential portfolio companies and VCs get the heavy lifting of sourcing &#38; screening offloaded.<p>My point is this - and has always been this - if traditional / non-profit incubators do not offer a way for their clients to get both Validation and Money, then the traditional Incubators will be diminished in their appeal.<p>And, at the same time, if traditional incubators do offer a method to provide Validation and Money to their client companies, they will prosper because of the inherent operating advantage of a local incubator.<p>The most expensive and labor intensive parts of the Seed stage of Risk investing are: Sourcing, Screening and Post Investment Oversight of the Seed company.<p>This is what an Incubator does !<p>The incubator should be compensated for this by a Fund that then delivers funding and validation on a worldwide basis to those incubator clients that are worthy of investment.<p>Hopefully, this will lead to worthy seed companies getting the validation and money they need at reasonable terms based on a discount from Series A - as opposed to XYZ % upfront.<p>Hopefully, this will lead to incubators generating good returns from their compensation for providing sourcing, screening and oversight. And this money can then be used to provide even more assistance to seed companies and less reliance on government / corporate grants.<p>Again, I do not have much respect for the Y Combinator model - but I really don't care what entrepreneurs want to do. If they want to take Y Combinator type money - great - take it and build a great company.<p>My concern is building a strong network of local incubators that offer what Seed companies really need while being compensated for their work."
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kingkawn
The view seems to be that business assistance is best provided by non-profits
looking only to assist and survive rather than profit minded investors looking
for young companies to hopefully make a killing from when they blow up.

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noodle
what exactly are they angsty about? i'm not sure.

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breck
This is interesting. I wonder if anyone here could comment on their incubator
experiences?

