
Paul Graham: Y Combinator Companies Have Raised Over $1 Billion - adambenayoun
http://techcrunch.com/2012/07/25/paul-graham-y-combinator-companies-have-raised-over-1-billion/
======
skrebbel
How very Silicon Valley of the author to treat these numbers almost like
they're profits, or any reasonable sort of "income" at all. The real question
is: how much of that money has already been multiplied tenfold, through exits,
IPOs or exorbitant profits?

~~~
pbreit
Why are HNers so dense when it comes to fundraising? No, the treatment doesn't
come off at all sounding like profits or income. Yes, fundraising is
definitely a point of success. Why do HNers have such a hard time with this?
Money is an important resource for growing companies! Sheesh.

~~~
pg
I think they're not so much dense as bitter. There's a subset of HN readers
who regard startups as a whole as a sort of con game, and are angry that the
participants get so much attention. There may not be that many of them, but
their anger makes them disproportionately active as commenters and voters.

~~~
thaumaturgy
I probably belong to that subset. "Bitter" is an uncomfortable term, but
probably accurate. Personally, it's not that I think startups are a con game
(and certainly not YC); it's that YC represents a tremendous amount of support
and resources and influence that aren't available to people like me who are
working just as hard, and are just as skilled, but aren't a good fit for YC.

It's tough in practice to not get a little envious of that support when you
don't have it.

I still think it's good manners to keep my jealousy to myself though. This
_is_ a YCombinator forum after all; bringing bile here just because we're not
alums is not cool.

~~~
vidar
Definitely good manners to keep the jealousy to oneself, but more important to
get rid of the jealousy altogether. Resenting others for their
success/progress is a huge energy waste (been there, done that).

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thaumaturgy
I don't resent anybody for their success or progress. That's not what I said,
and I'd hate for anybody to misinterpret me that way.

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il
It's pretty incredible to think that YC is likely the highest performing
venture fund in history.

For 380 companies that works out to about $7.6 million invested into a
portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after
dilution), that puts the value of YC's share at $155-$545 million on that $7
million invested.

~~~
nikcub
~20x isn't close in the pantheon of record venture deals, especially when
normalized to an IRR (annual return).

Benchmark Capital is often cited since their $6M investment was worth 500M+ at
IPO less than a year later and then eventually ballooned to being worth $5B as
shit got crazy.

the 12.7M Accel invested into Facebook in the A was worth ~$10B at IPO. I
think even that is less on IRR than the ebay deal

~~~
ajross
Right, but those are single deals. You could show similarly silly numbers for
YC/Heroku, etc... How did Benchmark and Accel do in aggregate is the question?
I don't think that data is public, is it?

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adambenayoun
What's interesting is that if 2-3 years ago, ycombinator had the ability to
identify and pick winners. I have the impression that in the past year it
became the other way around.

Y combinator by picking companies are in fact the kingmakers and are creating
the winners.

~~~
cluda01
Not too clear about what your last sentence means. Could you please clarify?

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pnachbaur
He means that in the past, they made good guesses about which companies would
be winners. Now, they have so much clout that merely by picking a company they
can make it a winner.

Of course, they're still making smart picks. It's just easier for those picks
to succeed.

~~~
adambenayoun
Thanks for translating it!

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harel
And how much money have they generated to date?

~~~
pg
Quite a lot, actually. While some startups (e.g. Twitter) take a while to
generate significant revenues, it happens that the most successful startups
we've funded were not of that type.

~~~
nitrogen
I'm curious what proportion of YC's success has come through very public,
consumer-facing companies like Reddit, vs. companies the outside world never
hears of, that quietly make tons of money behind the scenes selling to
businesses and/or governments.

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MaysonL
I do wonder how many (if any) successful YC companies have bootstrapped
(except for the YC funding).

~~~
_delirium
Depends on what you mean by successful. :)

I can't think of any YC-funded companies that have slowly grown organically
into modestly successful long-term businesses. Paul Graham made a comment
somewhere that YC actually has no problem if the founders want to build a
"lifestyle" business, and won't push for VC-backed moonshots if it's not in
the founders' interests, but I just haven't heard of that outcome happening.
It's possible I just don't know about them, though.

There have been several that sold for reasonably good totals without raising
any funding, if that counts. For example, Clickpass sold for $1m, and raised
no funding except YC's $20k.

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iioowwee
Raising venture capital is an interesting way to pay salaries.

But maybe a more interesting title is how much profit YC companies have made.

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wallawe
It's interesting, they invest an average of $15,000 in each company so let's
say they have invested somewhere around 6M.

According the the FAQ (<http://ycombinator.com/faq.html>) they take an average
of 6 or 7 percent stake in each company.

For shits and giggles let's use 6%. A low end estimate of their ROI would be
around a whopping 174%. Their current holdings of the 7.78 Billion would be
around 466 million.

This is all wacky math I realize but it's interesting to take into account how
well this fund has done.

~~~
adambenayoun
You're not taking into consideration the various dilutions and other preferred
rights from other investors but all in all - it's clear that this fund will be
very successful.

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cluda01
Didn't Paul breakout the outcomes of Y Combinator companies a while back (e.g.
acquired, sold, in business, etc)? It would be interesting to see if anything
has dramatically changed.

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swift107
I'm doing quick 3 min survey on what people think about certain venture
capital firms and see if there is any correlation to their industry, location,
school etc. Will post results back here upon completion.

<https://www.surveymonkey.com/s/VCstartup>

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teyc
That's amazing. Assuming the valuation of $5B, YC is now worth $250m.

~~~
earbitscom
More amazing, given that over half of the companies are from last year and
this year, and it is mostly agreed that they have only gotten better and
better by Demo Day.

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lazyjones
How much is Y Combinator's share (if any)?

~~~
adambenayoun
_We make small investments (rarely more than $20,000) in return for small
stakes in the companies we fund (usually 2-10%)._

Taken from <http://ycombinator.com/about.html>

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adambenayoun
Impressive numbers

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eupharis
Obligatory:

<http://imgur.com/7yyJC>

