

Should We Do Y Combinator? We're further along than most - dariusmonsef
http://whoabubs.com/should-we-do-ycombinator-were-further-along-t

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rriepe
I like YC as much as the next guy, but here's an important question: Why have
we never seen a blog post saying that it's not worth it?

Even if YC has an extremely high satisfaction rate, the sheer number of
startups they've funded has to have left at least one with a bad taste in
their mouth.

I love hearing feedback like this and I almost never get tired of reading this
article (especially when it has a good spin to it, like this). I'm just
interested to hear a dissenting opinion. (If one is out there, please link
me.)

~~~
pg
Actually it's possible to say when it wouldn't be worth it:
<http://paulgraham.com/equity.html>

I think the reason we don't often hear about borderline cases is that the
market is truncated at the high end by later stage investors, who wouldn't
allow the startups they'd funded to participate in YC even if they'd be net
ahead as a result. I.e. I've seen more than one series A funded startup that
we could have helped sufficiently to justify the dilution. But (as of this
writing) no VC would let one of their series A funded companies do YC.

As for funding a large number of companies, that's net beneficial as long as
we can devote sufficient attention to each one, because it means the alumni
network they become part of is larger. And we know we're able to devote
sufficient attention to each one because we can measure it in (a) office hour
signups (I have office hours this afternoon and there are still open slots)
and (b) how well each batch does after Demo Day (more startups in the summer
2010 batch have raised additional funding than any previous batch).

~~~
rriepe
Most who decide it's not worth it would (or rather, should) do so ahead of
time. I see.

Still, give a free car to a hundred people and at least one will complain
about the color of the interior. There's gotta be a sour YC alumnni out there
somewhere.

Even if he has no right blaming YC, I'd still like to hear his side of the
story.

~~~
pbiggar
FWIW, I failed at YC (in that my company failed after doing YC). Here's my
account: [http://blog.paulbiggar.com/archive/why-we-shut-newstilt-
down...](http://blog.paulbiggar.com/archive/why-we-shut-newstilt-down/). The
relevant YC part:

> YC had consulted and advised us every step of the way. When we had co-
> founder problems, they gracefully refused to take sides. When we wanted to
> make a new product, they advised us not to proceed without co-founders, and
> that we’d need to move to Silicon Valley to be fair to those co-founders.
> And finally, they didn’t expect a cent back, telling us to give all the
> money back to our later investors. Not once in my whole time at YC did I
> believe that they valued their investment more than they valued us, and they
> were OK with us closing down. YC is a class act.

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ludicast
Great article.

I wouldn't consider YC until they let you stay in NYC (would cost me too much
to leave in terms of present business (get on this Alexis (the East doesn't
need an ambassador but rather an embassy))), but the % valuations they give
are truly a drop in the bucket.

Yes companies get "screwed" by YC's initial valuation but in the long run it
works out great for them. The demo-day investments, as well as the "@ev
tweetability factor", are awesome things YC gives at a bargain of whatever %
they ask for. And with that compiled into the equation, each % is probably
worth 100k.

Do I think PG gets a piece of startups at a ridiculous deal? Yes. But that
just shows PG and YC are the sort of folk you'd do well to listen to and
partner with. And I can think of a few YC startups who came back for more.

~~~
rriepe
The Valley is already expensive enough! Although "NYCYC" is a fun acronym. I
think Techstars just started up in NYC-- check them out.

YC says they aren't an incubator. I think they're more like the eggshell.
Seems silly at later stages maybe, but developmentally crucial.

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ahuibers
I did YC summer 2009 (Bump). Of the 3 founders I was the most critical going
in, mostly based on valuation. But unlike most investor relationships, the
money is the minority part of the value provided. The majority is things money
can't buy: advice/perspective, encouragement, the front row seats mentioned in
the article, multiple networks, more. I didn't fully appreciate the quality of
the intangibles until later. Now my advice is- if you can get in, just do it.
Some people go through twice I hear, what is that saying.

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qixxiq
I'm in a similar position to what he described, although have a huge problem
in that we're down in South Africa.

We made it through to the interview round, and then declined when pg made the
call that we'd have to interview in person (up until then we were certain
video conference would be alright).

I am starting to debate my choice, but since we don't really _need_ the
program, a $3000 trip to the US for something we might not get into seems a
little silly; but at the same time - that cost is nothing in the grand scheme
of things.

~~~
dariusmonsef
For next time... You could have also used the time to: A. Network your face
off while in SF. Set up meetings with everybody you can. Investors if you're
trying to raise. Other startups, hackers, etc. B. Take a short vacation. I'm
sure you deserve it.

~~~
qixxiq
At the moment we have too much going on here to consider any of that,
especially if we planned on moving to the US for three months come January.

I could fly up mid-December if YC would be willing to let me pitch then (and
then stay on if we make it), but I'm presuming thats not the best time to
network -- if there is a good time.

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thomaspun
Darius is the man. Agreed with him 100%. I'll also look at YC % as "advisory
shares". You are actually getting a great deal considering the knowledge and
experience from the whole YC alumni network.

~~~
chewb
Giving up 6% for advice is very, very expensive.

~~~
gruseom
"Advice" isn't a commodity. How much it's worth depends entirely on who it's
coming from and whether they back it up with action. YC fight hard for the
startups they invest in.

For that 6% you're not getting idle advice, you're getting YC on your team.
It's a rare early-stage startup indeed whose value this wouldn't increase by
more than 6.4%. For most, getting into YC is a state change and has profound
effects.

Since by the looks of things you've created an anonymous account specifically
to question whether YC is worth 6% of a startup, I think at this point you
should either back up your assertions with something credible or be dismissed
as a drive-by troll.

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NewMonarch
I look at a YC investment (and most investments made by good angels) as less
about the money and more about improving your chances of not dying. When
you've got an early company, even if you're as far along as ColourLovers was,
the biggest risk isn't that you will give up too much equity. The biggest risk
is that you will die. And there are million reasons that you will die -- even
for companies with great early traction. Things just happen.

But with backers like YC, you suddenly have a team of proven badasses that
have a vested interest in making sure you succeed. So ask yourself, will YC
_improve your chances of success_ by more than X%? If the answer is yes, take
the deal. (Spoiler alert: the answer is yes.)

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jkin
Is there a site to rate them and get reviews? YC, funded institute, some super
angel funds? Would be good to have something like yelp for angels, VCs.

~~~
frisco
<http://www.thefunded.com/>

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neworbit
If you're going to get hit by antidilution clauses, of course forget it.
Otherwise, it may be a equity based way to buy into an investor network. If
you're far enough along, forget it and find a reasonably connected individual
or boutique ibank.

