Comment Re:Wow, I think every single person here misses th (Score 1) 178
I'm glad to see that someone pointed this out. It's true that YC makes very low valuations, but that is because the expected success rate for such early-stage companies is quite low.
I've had the pleasure of meeting a few YC backed founders and I can say with absolute certainty that they are not dumb guys who are clueless about business. If anything, the selected few know the true value of strategic support -- YC selection almost guarantees that you will be a highly discussed start-up and provides the necessary fire under one's ass to build the company on a shoestring budget and according to Paul Graham's (PG) philosophies (not a bad thing).
If you look at Guy Koswaski's portfolio (garage.com), you'll see that early-stage seed funding is not about cash. Guy's portfolio sucks. If anything, such large angel infusions work AGAINST the start-up ethic and creates the same false sense of security which cripples most large organizations.
Lastly 5% is NOT alot of equity for companies at the idea stage. More mature companies receive higher valuations, sometimes leading YC to only ask for 2% equity. Clearly not a controlling stage (and YC's official stance is that they will not fight for control of your company). As PG will be quick to point out, to justify selling 6% of the company's equity you only need to increase the value of your company by 7% -- something it is not tough to do at such an early stage.
I've had the pleasure of meeting a few YC backed founders and I can say with absolute certainty that they are not dumb guys who are clueless about business. If anything, the selected few know the true value of strategic support -- YC selection almost guarantees that you will be a highly discussed start-up and provides the necessary fire under one's ass to build the company on a shoestring budget and according to Paul Graham's (PG) philosophies (not a bad thing).
If you look at Guy Koswaski's portfolio (garage.com), you'll see that early-stage seed funding is not about cash. Guy's portfolio sucks. If anything, such large angel infusions work AGAINST the start-up ethic and creates the same false sense of security which cripples most large organizations.
Lastly 5% is NOT alot of equity for companies at the idea stage. More mature companies receive higher valuations, sometimes leading YC to only ask for 2% equity. Clearly not a controlling stage (and YC's official stance is that they will not fight for control of your company). As PG will be quick to point out, to justify selling 6% of the company's equity you only need to increase the value of your company by 7% -- something it is not tough to do at such an early stage.
