A quick google says the valuation of the top YC companies combined is more than $300bn, although market capitalisation is a poor way to define how big a player is or how impactful they are in their space.
No! YC (assuming it's like other investment companies) is a management company, and just takes percentage. Industry standard is around 2% management fee and 20% of the gains, though it varies, and it may be quite different for YC, being quite a different kind of investment company (compared to more traditional VCs).
The rest of the gains go to the limited partners (LPs) - the institutional investors who put in the money. Of course the YC partners are investors too, particularly in the early days when YC was just a structure for the original four partners to invest in startups.
But these days most of the returns would go to external LPs.
Er YC owns around 7% of most of the companies it invests $150000 dollars in? The potential for them to keep adding 7% of many billion dollar companies seems very high... YC is an incubator not a VC or management company.
This isn't right - though my initial comment wasn't quite right either, it seems.
YC has had limited partners since 2014 [1], and at least some of the 7% equity is allocated to that LP fund, though it's not clear how much. For a few years before that much of the $150K was provided by outside VCs.
This must be the case, as YC's operations (number of companies funded) has been growing rapidly since well before their standout companies reached liquidity (though I heard somewhere they've sold some stock privately earlier to fund growth).
The whole ~7% was owned by YC itself back in the first few years when YC was just a vehicle for the original four partners to invest in startups efficiently, and they only invested about $20K per startup. But that ended in about 2012 when new investors came in and the deal changed from ~$20K to $150K.
Sure, they're still hugely successful! But it's just not a simple case of all those 7% stakes (less dilution) of every YC-funded company ever sitting in the ownership of a single YC entity.
Thanks for the clear and detailed information. I doubt they need the outside investment right now but I guess historically it was a great way to scale.
Cheers. FWIW it's not about "need" as much as it's about leverage. They'll keep asking "how much faster can we grow if we take in this much more funding from outsiders?" There is such a thing as too fast too, which they've found before, so it's about finding the right balance.
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How much is YC worth at this point, it’s crazy how many of the businesses they sponsor end up pre-eminent in their sector despite huge competition.
A quick google says the valuation of the top YC companies combined is more than $300bn, although market capitalisation is a poor way to define how big a player is or how impactful they are in their space.
So potentially YC is a trillion dollar company if it were to float? I’d certainly buy shares in YC :-)
No! YC (assuming it's like other investment companies) is a management company, and just takes percentage. Industry standard is around 2% management fee and 20% of the gains, though it varies, and it may be quite different for YC, being quite a different kind of investment company (compared to more traditional VCs).
The rest of the gains go to the limited partners (LPs) - the institutional investors who put in the money. Of course the YC partners are investors too, particularly in the early days when YC was just a structure for the original four partners to invest in startups.
But these days most of the returns would go to external LPs.
Er YC owns around 7% of most of the companies it invests $150000 dollars in? The potential for them to keep adding 7% of many billion dollar companies seems very high... YC is an incubator not a VC or management company.
Sure I haven’t factored in dilution but still...
This isn't right - though my initial comment wasn't quite right either, it seems.
YC has had limited partners since 2014 [1], and at least some of the 7% equity is allocated to that LP fund, though it's not clear how much. For a few years before that much of the $150K was provided by outside VCs.
This must be the case, as YC's operations (number of companies funded) has been growing rapidly since well before their standout companies reached liquidity (though I heard somewhere they've sold some stock privately earlier to fund growth).
The whole ~7% was owned by YC itself back in the first few years when YC was just a vehicle for the original four partners to invest in startups efficiently, and they only invested about $20K per startup. But that ended in about 2012 when new investors came in and the deal changed from ~$20K to $150K.
Sure, they're still hugely successful! But it's just not a simple case of all those 7% stakes (less dilution) of every YC-funded company ever sitting in the ownership of a single YC entity.
[1] https://techcrunch.com/2014/04/22/yc-ends-venture-partnershi...
Thanks for the clear and detailed information. I doubt they need the outside investment right now but I guess historically it was a great way to scale.
Cheers. FWIW it's not about "need" as much as it's about leverage. They'll keep asking "how much faster can we grow if we take in this much more funding from outsiders?" There is such a thing as too fast too, which they've found before, so it's about finding the right balance.