Four months ago, in a thread about crowdfunding (http://news.ycombinator.com/item?id=3893783) you said that "having a very large number of inexperienced investors is the worst scenario possible."
FundersClub is a YCS12 company, so I´m curious: what made you change your mind? The whole scenario? A different approach if an entity works like a proxy? Is there any secret sauce you can share?
The question to which PG responded [http://news.ycombinator.com/item?id=3893783] was along the lines of "Why not open up YC to crowd funding?" The answer was that there nothing for YC to gain by encouraging a rabble of investors jump into YC's pudding. In other words, PG believed that accepting crowd funding would be a distraction to YC companies (and implicitly therefore lower the value of YC's investment).
On the other hand, funding a startup through YC which makes money by providing services to people who think crowdfunding is a great idea (and perhaps solving some of the problems along the way), may be a profitable investment for YC.
In other words, PG didn't advocate crowdfunding as a better source of capital than the sources of capital YC has been using for YC companies . However, this does not mean that crowdfunding services are not a potentially sound investment for YC's partners.
Otoh it also gets a potentially vocal group that can create much noise if they disagree with the actions of the company (and much more quotable by the press for that matter).
Commoditize your complements: make startups commodities but preserve early stage funding a non-commodity.
I wrote about this years ago when pg gave a talk about opportunities to make markets efficient:
I guess FundersClub makes some kind of 'secondary investors' a commodity while preserving Sillicon Valley investors 'primary investors'. Also funding at FundersClub seems to be not in the very-early-stage, so the funders are already not competitors to Y-Combinator.
A much more satisfying answer would be along the lines of: "I don't want the startups I fund to be croud funded because I believe they wont get the support they need, however I have no problem personally funding a company which manages the crowd-funding movement because that could be profitable"
My take on this:
Crowdfunding will be hard to execute -- novice investors, multiple sources of bad advice, selection biases (the worse companies will attract the 'worser' investors).. the list goes on.
With that said there is a lot of genuine interest in the model and there are bound to be atleast a couple of platforms that get traction . If you were YC with access to pick the best possible team to make this happen -- why wouldn't you invest ?? Its such a small portion of your investments and you get that diversification.
Second does not matter what your personal convictions are, the only way to know for sure is by trial and error -- who knows crowdfunding maybe the model of the future.
Finally you are supporting a good cause -- there is a lot of populist rage against the investor class (not VC's in particular but more wall st types),, allowing companies to go around 'wall st' and giving the lay person a chance to be a part of the next facebook is a great story.
My 2 cents.
Not necessarily lay person. For example maybe a world-class database technology expert in Russia wants to invest some thousand dollars into a database technology startup. Maybe he has more understanding about the technology/market than so-called 'experts' (Sillicon Valley investors).
At the onset of crowdfunding, less sophisticated transaction arrangements are likely to not prioritize those two scenarios. But it makes sense when we think of crowdfunding at its maturity.
1. It's not dependent on the JOBS Act. It's like Angellist, in that they vet to see if you're a legitimate investor, except you can actually invest right there on the platform. With the proliferation of standard seed docs, this makes a ton of sense.
2. It's curated. It's not a free-for-all, it's going to make impactive differences in targeted companies. That's dope.
3 would be their secret sauce and their plans, which I'm sure are awesome.