A VC - Latest Comments in The Best Deal In Startup Land

Re: The Best Deal In Startup Land

Michael — Wed, 11 Nov 2009 12:35:39 -0000

Indeed th YC model presents advantges. For all the interesed startups check out www.vcgte.com, there are over 4300 investors or read some startup reviews on the same webpage.

Re: The Best Deal In Startup Land

Dan — Tue, 22 Sep 2009 22:50:37 -0000

Very true. I was just talking with a more seasoned gentleman than myself in a coffee shop here, and he told me he was beginning to think that looking at factors other than business plans may be key. I pointed out that business plans often cite current market sizes, but it is hard to show new and large markets because you really need to build something for customers first ("will you use this?" will work on occasion, but not always).

The problem I've always had with any application is that you don't get the opportunity to show yourself and how determined you are. Figures on paper can easily lie. What's important is character, and only real life experience can give someone confidence in another person.

Re: The Best Deal In Startup Land

maeozkan — Tue, 22 Sep 2009 18:59:51 -0000

Great! Thank you very much. I am downloading it right now.
(Barbara is co-chair of our management company. She has been very helpful.)

Re: The Best Deal In Startup Land

jedc — Tue, 22 Sep 2009 18:40:13 -0000

Hi! I recently posted my paper (and the underlying data sources) here:
http://blog.jedchristiansen...

The paper is on Scribd, so you can read/download it as you like.

(I see Lady Judge is part of your team... my business school is named after her husband!)

Re: The Best Deal In Startup Land

maeozkan — Tue, 22 Sep 2009 18:31:56 -0000

Jedc, I would love to see the paper as well. Could you send it to me as well, please? My email is mae at goldenhornventures dot com. Thank you very much!

Re: The Best Deal In Startup Land

dig bands — Sat, 19 Sep 2009 15:51:35 -0000

creating the right product is more important than money.i think.so.

Re: The Best Deal In Startup Land

heidi harman — Thu, 17 Sep 2009 18:06:39 -0000

Seedcamp is a healthy reality-check for all entrepreneurs, getting feedback on your own idea or not, getting the cash or not. At the end of the day, you´ll create your idea anyway (with or without cash) but having people that want to reflect with you - that money cant buy. Keep up the good work Reshma!

Re: The Best Deal In Startup Land

fredwilson — Thu, 17 Sep 2009 08:50:01 -0000

Yup

Re: The Best Deal In Startup Land

Dave Pinsen — Thu, 17 Sep 2009 08:25:37 -0000

Sort of like Jim Collins's observation about how great companies were "cult-like places to work"?

Re: The Best Deal In Startup Land

kidmercury — Thu, 17 Sep 2009 07:47:48 -0000

no worries, we are all conditioned by the propaganda we consume, i'd rather be conditioned by paul graham than most of what's out there.

though i agree it is not for certain entrepreneurs. though i am a big fan of the model and value proposition i myself could never do ycombinator, i'd find it too confining.

Re: The Best Deal In Startup Land

kidmercury — Thu, 17 Sep 2009 07:43:08 -0000

lol i hope you'll diss mint if they do

Re: The Best Deal In Startup Land

ShanaC — Wed, 16 Sep 2009 22:58:29 -0000

So now that I've read and thought about the thread, is it odd to crowdsource this question in a functional way, as in take a bunch of ideas, and see what people come up with?

Re: The Best Deal In Startup Land

Chris Dodge — Wed, 16 Sep 2009 22:23:14 -0000

Ag, always late to a thread that really interests me.

I've been watching the "next-wave" incubators like YC and TS for some time now. I'm a big fan of the model.

What I've been seeing are more and more incubator-like models with VC parentage, Polaris just announced one the other day. However, like any investing approach, either at this seed-stage or later Series X stages, the amount of "quality" really is the limiting factor. I've spoken with many people in this sector and they all say how hard it is to identify quality seed-stage companies that is appealing at even such a low funding level.

With ever more numbers of incubators coming online, this competition for quality deals (just as it always has been) will increase. I wonder if that may in turn cause a shift in the financial offerings to attract the best deals.

Re: The Best Deal In Startup Land

jedc — Wed, 16 Sep 2009 18:32:09 -0000

Hi, Steve. I was the one who put the YC, Seedcamp, TechStars, etc. data together... thanks for mentioning it so many times here!

It's not 100% complete for YC, but is virtually complete for the rest. But even for YC it's probably 90%+ correct (except for valuations, which are my personal guesses.)

Re: The Best Deal In Startup Land

jedc — Wed, 16 Sep 2009 18:26:21 -0000

Hi, Fred. I put together that spreadsheet with YC, Seedcamp, TechStars, etc. as part of my master's thesis on the rise of these types of programmes. I'm blogging my results (and the full paper) shortly. Will definitely send you the link once it's up.

So far, YC and TechStars in particular look successful. Both look like they've already made their money back in the companies that have already exited, and YC in particular has a handful of companies that could be real home runs, even after all the dilution.

Re: The Best Deal In Startup Land

ShanaC — Wed, 16 Sep 2009 17:13:17 -0000

You don't even need to, they come recruiting for cute undergraduates from what they determine are the right schools around now....

Re: The Best Deal In Startup Land

Satish Mummareddy — Wed, 16 Sep 2009 15:37:41 -0000

Hi Steven
I agree with you in principle that the 6% should not be a hard # and should be proportional to the value that YC adds. And i think they add more than 6% value for some teams and less than 6% for some teams. Yesterday night i though that YC had a hard 6% that they want. But i just dropped by YC website and saw this.

"We usually invest $11,000 + $3000n, where n is the number of participating founders, up to 3 (i.e. 2 founders get $17,000, 3 or more get $20,000), in return for between 2% and 10% of the company. The average is 6-7%."

So maybe your point is already taken into account by Paul as he is willing to negotiate on the cut he wants based on the value add that he is going to provide to that team.

Re: The Best Deal In Startup Land

kenberger — Wed, 16 Sep 2009 14:47:58 -0000

I attended YC's Demo Day this past spring. That was a time when the Chicken Littles across worldwide Startup Land were heard at a fever pitch (maybe they still are). You'd never know that sitting in the room in Mountain View, or more importantly, if you've monitored the progress of some of the graduates since then.

Even if Paul, Jessica and the team did nothing for you (very untrue), the COMMUNITY and NETWORK you join are beyond price. These programs are aimed at super talented, driven, but very new people whose thinking tends to get transformed by the involvement.

"What if Facebook, Twitter, etc took those terms? How would they be now, huh, huh??" is a line written by a financial analyst using hindsight thinking, and misses the mark here.

Re: The Best Deal In Startup Land

markallenroberts — Wed, 16 Sep 2009 13:59:32 -0000

What is often the case is entrepreneurs have false expectations. So I wrote a short eBook about the 50 ugly truths of starting your own business at http://nosmokeandmirrors.wo...

Keep up the thought leadership as a number of my clients are now enjoying your content, and getting a real picture versus a false expectation.

Mark Allen Roberts

Re: The Best Deal In Startup Land

Keenan — Wed, 16 Sep 2009 13:28:22 -0000

Don't underestimate the value of access. As someone who recently failed at a Web 2.0 start-up. (cre8buzz.com, RIP) access and mentorship would have been huge. We had a great idea, we were passionate about it, (still think it could work) and to have had the mentorship and support would have had tremendous impact. I would have GLADLY given up 6% for that.

The early, early stages of a start-up can be the loneliest and hardest (as well as the most exciting). There is little historical data to say you are on the right track. You are constantly selling your idea and why it's good. There is lots of rejection, challenges to your premise idea and little positive reinforcement. As your idea solidifies, and comes together much of that begins to change, however, having a mentor like Y Combinator would only accelerate the process, expand options and minimize the dumb mistakes.

It is a great deal, well worth the 6%, especially at the stage in development. I would have taken it!

Re: The Best Deal In Startup Land

Himanshu Sheth — Wed, 16 Sep 2009 12:44:50 -0000

The same Y- Combinator has now been replicated in India as well. There is Morpheus Venture Partners, IAccelerator and might be many others to follow which are very much tightly coupled to the Y-Combinator model. Some currently provide only mentorship whereas other provide the seed money for the venture.

-Himanshu Sheth

Re: The Best Deal In Startup Land

Carl Rahn Griffith — Wed, 16 Sep 2009 12:13:47 -0000

As ever, simple is good. Well said.

A percentage means nothing. Value means everything.

Re: The Best Deal In Startup Land

Carl Rahn Griffith — Wed, 16 Sep 2009 12:09:17 -0000

Interesting - and refreshing - feedback, Reshma. At this early stage most ventures are seeking a sanity-check of sorts. An abundance of funding at the early stage is not, I believe, a healthy thing and can be counter-productive in fact - there's plenty of time to become 'conventional' when successful (and is usually when the decline starts, if that's allowed to happen!). More important is the building of a cohesive, focused team with a shared vision.

Only just became aware of next week's event - looks good, hope it goes well.

Re: The Best Deal In Startup Land

fredwilson — Wed, 16 Sep 2009 11:04:11 -0000

nay in the sense that maybe it is not the best deal in startupland

Re: The Best Deal In Startup Land

Steve Kane — Wed, 16 Sep 2009 10:59:02 -0000

Yep

That's all I have been trying to say - definitive statements about the value of the YC deal are premature