Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

http://techcrunch.com/2011/01/28/yuri-milner-sv-angel-offer-every-new-y-combinator-startup-150k/

by ssclafani • 15 years ago

425 189 15 years ago

techcrunch.com

dusing• 15 years ago

Wow, big win for YC!

mindcrime2• 15 years ago

Wow; that's great news. Congrats to the YC companies for this opportunity!

Guess it's time to get cracking on those YC applications, folks...

sahillavingia• 15 years ago

Holy shit. The word "disruptive" is overused but it's pretty applicable here. Crazy.

But is this fair to other angels/investors?

BenSchaechter• 15 years ago

This is what I was thinking. It might be better for people trying to raise money from other angels who aren't a YC company because the new YC batch now has their boats floated for quite a bit more time.

peteforde9• 15 years ago

A lot of people will hate this, but it's neither unfair nor immoral. There's nothing stopping anyone else from making similar deals, including you.

What it does do is turn YC into a market index. Interesting.

JabavuAdams• 15 years ago

> There's nothing stopping anyone else from making similar deals, including you.

SEC Accredited Investor Status.

patio112• 15 years ago

Capitalism happens. plays tiny violin

Less sardonically: if YC is so ridiculously superior to other investment models that investing money at these terms is profitable knowing nothing of the actual company invested in, then the system is broken. This is the market's corrective measure, attempting to come up with a better approximation of the true value of early stage startups. Might it discomfit people who made a lot of money when it was broken? shrug

nostrademons3• 15 years ago

My first thought is that there must be a ridiculous amount of money floating around in the capital markets right now...

jackowayed2• 15 years ago

> It’s the most investor friendly investment that I can think of, short of just handing people money as a gift.

s/investor/entrepreneur/

samwise• 15 years ago

$150,000 in convertible debt. With no cap and no discount.

I suspect all 40 companies will take the money on those terms. You would be crazy not to.

rudiger5• 15 years ago

What are the terms of the deal, specifically? How much to startups have to pay back if they take the $150K, and when do they pay it? What about valuation of the startups (ie. $150k for 10% implies $1.5m valuation)? Or is this more like a loan ($150k, pay back over X years, or upon Y liquidity event)?

bhavin• 15 years ago

Its convertible debt, meaning that whenever the startup raises the A series funding, at how much ever valuation, SV angel gets 150k worth percentage stock in the startup.

e.g. If the A series funding was taken at $1.5 Million valuation, the SV share in the company would be 10%. No valuation ceiling, no discount. Lower the A series valuation, better off SV angel are.

JoeAltmaier5• 15 years ago

It means your plan IS to give some of your company away for money. Instead of holding 100%, getting ramen-profitable, working your butt off to make it.

mattgratt• 15 years ago

YC is now the best deal that exists.

mkramlich2• 15 years ago

maybe now we need a YC for new YC's

rudiger5• 15 years ago

How many thousands of people apply for YC every year? Someone should offer a service: $500 to prepare you for a successful YC application.

JoeAltmaier5• 15 years ago

Hm. There are folks still using the 'old-fashioned' model of fundraising manually, building a team, honing a product and going to market.

YC may be the best deal for a crew of wet-behind-the-ears startup virgins, I'll grant that.

justin2• 15 years ago

That was a trollish comment but I'll bite.

150k is not going to get a company very far, and certainly not far enough to reinvent the startup model completely. Building a team is still a critical part of building a YC (or any other) company, as is honing a product and bringing it to market (which is primarily what they help you do). Saying that those things aren't part of the YC model just because you get some extra free money on great terms is disingenuous.

Also, more and more experienced entrepreneurs are going to YC, because of the effects of the network and because the money really isn't that expensive. People always bring up that it isn't a great deal for experienced entrepreneurs, but you can ask my friend Steve, who just sold Reddit, went back to YC, and just raised a fat series A for hipmunk whether it was worth it.

ssclafani• 15 years ago

Congrats to YC and all of the startups. Sadly, I can already hear the chants of "Bubble!".

robryan5• 15 years ago

Not really, I think most of here would assume YC would in the next few years produce a solid return. Here your basically aligning youself to YC's performance instead of trying to pick which ones you think will turn out the best. Although sounds like they are still doing that additionally.

daniel_levine• 15 years ago

absolutely not. YC is getting their percentage at valuations of around 200-300k.

This investment will convert at valuations closer to 5M these days. So in fact they're effectively paying 10x what YC is paying for about the same stake in a company post the financing.

Congrats to YC and time will tell if it works, exciting either way.

ebaysucks2• 15 years ago

Performance is only the nominator of what defines return.

The denominator is the investment valuation, which is significantly different for YC and DST.

peteforde9• 15 years ago

There's only two types of people in the world: people who chant things and people who do things.

cal5k• 15 years ago

Great for entrepreneurs, but eventually it will be the relatively unsophisticated angels who will get burned by these valuations.

I have no problem with that, really. In 2001 it was different - everyone was playing with public money through IPOs. Now only a few quite established companies can afford to go public.

Don't be mistaken, though - this will turn into a bubble, whether you wax romantic about "entrepreneurs just do it!" or not. It always happens - it will happen again, life will go on, but it will happen.

rgrieselhuber• 15 years ago

Adding that to my list of favorite quotes.

Mz• 15 years ago

I don't think you will have to wait long to hear that (or something akin to it):

http://news.ycombinator.com/item?id=2154902

spreety2• 15 years ago

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robryan5• 15 years ago

So this investment isn't at a valuation and the valuation is only decided at a future round at which point this converts into an amount of equity based off that valuation?

I've read about convertible notes before just a little confusing at first.

staunch3• 15 years ago

Right. $150,000 paid in advance. Whenever the company raises its first significant money (usually >=$1M) that $150,000 buys equity at the same rate the new investors are paying.

hugh33• 15 years ago

Is there any way to game this?

For instance:

1. I get $150K in convertible debt from Yuri.

2. At the end of YC, my rich friend Joe decides to invest a million dollars in my company at a valuation of five hundred trillion dollars. Yuri thus gets an insanely small slice of my company.

3. Two days later, my company buys Joe's shares back for a million dolars.

4. Now my company goes off to seek actual funding at a sane valuation. Yuri gets annoyed.

webwright2• 15 years ago

In the event of a funding event (or change of control), this $150k turns into $150k worth of stock at the valuation established AT THAT TIME.

Example #1: Company A takes the offer and sells for $1m in 6 months. The debt converts to $150k in stock, netting the investor $150k.

Example #2: Company B takes the the offer and raises $1m at a pre-money valuation of $3m (selling 25% of the company and establishing a post-money valuation of $4m). The $150k turns into $150k in stock at the new valuation, so 3.75% of the company.

Normally, there are various ways (discounts, caps, etc) to reward the early investor for the additional risk they are taking for investing so early.

Basically what this means is YC companies can (if they want) eschew funding at demo day, hold out for great terms, or just get busy creating value and raise money when they have more leverage. This is huge.

rudiger5• 15 years ago

After reading this explanation, it's hard not to acknowledge this as a disruptive gamechanger. I mean, this completely changes the game for YC and every one of their successful applicants.

ericmsimons• 15 years ago

That is awesome. I wish I'd made it into the winter 11 batch :(

citricsquid• 15 years ago

Investing in a company based on its acceptance into YC? Hm. Also, I think this breaks the model a bit, I thought the point of the initial small(er) investment was to drive creation of a product or business model that could then expand naturally or take further investment once they've proven the products value/viability etc. I guess for some it would be a bonus, but for some it might be a curse?

Although "Paul Graham seemed very pleased" implies it doesn't, so I figure I'm wrong. Maybe it is for the better, especially when it's optional...

forensic• 15 years ago

The model has changed. Now it's about the ability of Paul et al. to pick horses.

(Also the Ycomb environment and all that too)

jacquesm8• 15 years ago

Yes that's the best way of putting it. YC is seen as a vetting agent that has so much experience in evaluating start-ups now that their ability to separate the wheat from the chaff makes a deal like this feasible.

How long before a major VC steps in to offer a third round for those that get to some pre-set goal to every YC funded company that took the second round too?

jacquesm8• 15 years ago

Super news this, that's going to have one nasty little side effect, YC will see an order of magnitude increase in the number of applications they will receive in the next round.

Predictably there will be a lot of bitching by other angels, imo they should create a fund and offer to match.

YC might become a one stop shop.

robryan5• 15 years ago

Is more applications necessarily a bad thing though? Sure they are likely to miss more winners and the application/ interview process is going to be even more time consuming but you would have to think it would translate to a highly quality group.

jacquesm8• 15 years ago

Reviewing applications is hard work.

YC now has more partners and a larger network of alumni so that should help a bit with scaling this.

keeptrying• 15 years ago

When was the last time you looked at a yc company and didn't say "Damn that's a great idea." and then follow it up with "wow that's pretty good execution too".

It's a little scary how good the yc companies seem to be lately.

peteforde9• 15 years ago

I'm not keeping a tally but I often find myself scratching my head and wondering what PG et al saw in some startups.

My guess is that it's usually a bet on the people, not the idea. If you mentor a founder that eventually starts the next Google, they are going to remember that.

johnrob• 15 years ago

This is awesome. It's great to see big money split up into lots of small investments. I've always wondered what would happen if Microsoft took 1 billion dollars and make 10K $100K angel investments. Something amazing would surely come out of so many trials. Traditionally, that 1 billion (if invested in startups) would be doled out in 100 or so $10MM-ish chunks, mostly to later stage companies.

coryl• 15 years ago

Wow, amazing deal. Only time will tell if its good for them or not.

jgilliam• 15 years ago

Web startups are now rock bands, and YC is the record label.

mindcrime2• 15 years ago

%cough% There is more to the startup world than just "web" startups, ya know. %cough%

And YC don't limit themselves to just web startups, or even just to software companies, according to the FAQ. [1]

[1] http://ycombinator.com/faq.html

tlb• 15 years ago

Relatively few are pure web startups. They all have websites, of course, but most companies YC funds are in a particular business.

peteforde9• 15 years ago

I know people are excited right now, but this is a terrible analogy. Rock bands don't need labels to succeed anymore, and the vast majority of record labels are deeply corrupt. They are consolidating to avoid bankruptcy, and throwing their CapEx funding into litigators and lobbyists so that they have someone to blame when in reality it was their greed and ignorance that brought their downfall.

Does that sound like what's happening at Y-Combinator?

MichaelApproved2• 15 years ago

I thought rock bands got shitty contract deals from record labels. These terms seem pretty fair and very unlike the recording industry.

bryanlarsen• 15 years ago

On the surface, YCombinator IS giving a shitty deal. 6% for a few thousand dollars? That's highway robbery.

Except, of course, you're getting a lot more than money for your 6%. The difference is that YCombinator's promise are much less empty than that of a record labels.

(I know, I deflected. Milner's terms are not shitty. It's YCombinator's that are, but only on the surface).

_b8r0• 15 years ago

You just made me throw up in my mouth a little. But I do see your point.

staunch3• 15 years ago

Every YC batch should have at least 1-2 big wins. They're betting that it's more important not to miss out on those than to save a little money trying to pick the winners. A great strategy if you can afford it.

jacquesm8• 15 years ago

> Every YC batch should have at least 1-2 big wins.

Can you quantify a big win?

staunch3• 15 years ago

Heroku.

dschobel• 15 years ago

I think the more controversial part of his statement was the claim that every class has had 1-2 big wins.

I don't believe that's been borne out yet.

gojomo• 15 years ago

I saw on the news it was going to rain tonight; I didn't realize they meant that in Mountain View it would be raining money.

greglockwood• 15 years ago

And the collective of the YC W'11 hopefuls just let out a wistful sigh. At least I did.

marcamillion3• 15 years ago

...and they said good guys finish last? PG seems to be proving them wrong, every day.

furbearntrout• 15 years ago

Remember that life is not a race, neither is investing.

marcamillion3• 15 years ago

HaH! Try telling Calacanis that.

davidmurphy• 15 years ago

High five, pg!

pg3• 15 years ago

⁵

sushrutbidwai4• 15 years ago

This sounds like a campus placement scene. If you get in a top college, you wont be even interviewed properly or see how you have changed in last few years/months. We will just hire you with fat paychecks.

As shown by history - this does not work in the long run and makes things worse than better.

Dont get me wrong - YC is great, pg and rest of the team do an amazing job of selecting startups. But such blanket offers will mean lesser money available to non-YC companies. So if you are competing with a YC company, you have so much ground to cover.

More money for startups is good, but quality of the startups should be judged almost every 3 months. That is very healthy for entire startup community on the whole.

jacquesm8• 15 years ago

> But such blanket offers will mean lesser money available to non-YC companies.

They could have bought a boat instead, investing is not a zero sum game, they don't have to spend the money.

sushrutbidwai4• 15 years ago

Right. We will just invest in all YC companies. Why bother reading up business plans, checking out markets, exploring new things. YC thinks some one is good, we will put our money. If 10% of YC companies give huge exits fine. As investors - our job is to just provide money. Why bother with research?

And as an entrepreneur, do you really want to take money from some one who might not have enough knowledge about you and your business? Who is relying on a second hand judgement about you and your business, even if that judgement directly comes from pg?

DevX1012• 15 years ago

" But such blanket offers will mean lesser money available to non-YC companies"

I actually think precisely the opposite will happen.

waterlesscloud3• 15 years ago

I think you're right. It's like the concept of "anchoring", setting a new normal.

iamwil• 15 years ago

I thought this too, but someone pointed out to me that, unlike new hires at companies, customers don't care whether you're YC or not, or who you took investment from. The market is still as harsh as ever, and you'd better produce if you're going to make it.

The only place I can see this as being a problem is with acuhires, where an acquiring company can potentially care whether it's a YC company or not.

rudiger5• 15 years ago

"As shown by history - this does not work in the long run and makes things worse than better."

Any evidence for this statement? Because I think the system works just fine.

DevX1012• 15 years ago

For all the talk from U.S. politicians about encouraging innovation, it takes the Russian to come here and put his money where his mouth is.

andreshb2• 15 years ago

Consider, also, that most entrepreneurs in tech are foreigners (or children of), Vivek Wadwha had an interesting article on that. But those that stand out: Larry+Sergei.

If "The Russian" comes to the U.S. to make an investment is because the U.S. has done a really really good job in terms of policy to make it easy and convenient for foreign investors to bring money to the U.S. now they (gov) need to do the same for talent/entrepreneurs.

jolhoeft• 15 years ago

A while back as I was meandering through my history readings, I noticed that most of the philosophers, sages, and artists of ancient Athens weren't from Athens. I didn't actually follow that up with a study to confirm it, but I can't help but wonder if there is some deep truth hidden here.

_delirium• 15 years ago

Digging up Vivek Wadwha's article, he found that 25% of U.S. tech entrepreneurs were immigrants, which is certainly higher than their share of the population (about 10% of U.S. residents are foreign-born), but not really "most". The numbers were higher for the Bay Area, though, at about 50%; but then the number of total immigrants in the Bay Area is also higher (33% of Californians are foreign-born).

dave1619• 15 years ago

And it helps when your investment company now owns 10% of Facebook. Smart guy who takes bold risks.

edge17• 15 years ago

I'm tempted to say 150k is not a bold risk for this guy. Neither is 150k * 50. Small cost to expand your portfolio... and you just need one homerun.

nir2• 15 years ago

When YC takes developers and mentors them towards a first version in an aggressive timeframe with limited resources, it's encouraging innovation. When someone comes in and gives a bunch of company they know nothing about $150k each, it's called having more money than sense.

waterlesscloud3• 15 years ago

But they aren't investing in companies they know nothing about. They're investing in companies that have made it through the YC sieve. If nothing else, they know that about them.

These are investors with a large number of connections in the silicon valley world. My assumption is that they have some extremely well-informed spreadsheets about past YC company performance.

andreshb2• 15 years ago

There seems to be a correlation between high performing funds and how fast they move to get into the good deals, this is a very efficient way for SV Angels to move faster than anyone else. They already moved fast before, now it's a tremendous head start.

If it's a bubble, it's a cheap bubble $6M is nothing for most funds.

peteforde9• 15 years ago

It's only a bubble if the world stops spending money online and every re-discovers network reality television as a hobby.

rdamico• 15 years ago

Unless there are additional terms at play here (e.g. liquidation preference), this means that unless YC companies raise a series A before exiting, Yuri and SV Angels won't get more than a 1x return (plus interest).

It's hard to believe the math works out here, but obviously a lot of thought and number crunching has gone into this decision. Great news for YC though!

spydertennis• 15 years ago

I think that depends on how the note is written. I've never seen a note without a cap but usually it converts at the cap on acceleration. No idea how a conversion at acceleration would work if there is no pre determined valuation but it could be possible.

trotsky2• 15 years ago

Basically he just paid $6M to have a seat at the table and be a guaranteed call when they're raising their series A. I guess that's one way to get in to the early stage game.

knowsnothing613• 15 years ago

It's not about PR. It's about a halo effect. DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions.

He can afford to gamble $6M on YC startups, if they will create demand in the market for his hundreds of millions dollars worth Groupon, Facebook, Zynga shares.

It's a good assymetry position to have.

If one of the 40 becomes the next google, he wins. If he can exit his DST positions, he wins.

However if the web bubble burst, he is sh*t out of luck. And DST will be a huge bagholder.

hugh33• 15 years ago

DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions.

I don't get it, how does this help with that?

kjksf• 15 years ago

From the article: "Now he’s partnering (as an individual, not as part of DST)"

ztan• 15 years ago

That's $6M every batch, at least $12M a year. Assuming YC classes does not expand. I think PG mentioned about 1/3 of the YC companies fail. So that's $4M in the water every year. Out of the rest 2/3s chances of being a Heroku are... actually I'm going stop here because I'm sure they've worked out all the math already.

trotsky2• 15 years ago

Why stop there? How about $50k to everyone in the greater bay area with 10 slides and a business plan?

MichaelApproved2• 15 years ago

Maybe the extra 150k can help lower the 1/3 failure rate.

tchae• 15 years ago

absolutely crazy

peteforde9• 15 years ago

Honestly, I'm surprised that nobody did this sooner. Hell, didn't Conway invest in six of the last round anyhow?

This is sort of like going to the race track and betting on every horse. Except at this particular race track, the horses are all above average and multiple horses can win each race.

I'd take those odds.

bl4k• 15 years ago

you almost rescued the analogy, but not quiet.

peteforde9• 15 years ago

Edits welcome. Where did I go wrong?

mdda5• 15 years ago

The clever thing about this is that Yuri doesn't have any of the due-diligence costs of Ron Conway : He's outsourced it all.

OTOH, maybe/probably Ron Conway actually enjoys the thrill of the hunt for new exciting stuff, so he doesn't consider it a particular cost.

Right now, according to the article, YC (pg) is happy about the situation : it improves their brand, helps entrepreneurs, etc. But I'm sure that they'll realize that Yuri just got in at a better valuation (on average) than they did, but they're doing all the work. Of course, they probably already have realized this, but they don't have many other options now - other than inserting 'poison pill' anti-freeloader terms into their deals...

schwabacher• 15 years ago

Why is he in at a better valuation than YC? From what I read it seemed like he loans 150k for an option to be repayed in stock at whatever valuation they take their first round of funding at? YC's 30k goes in at somthing like a 0.5 million valuation, so i would assume the rounds most of these companies are taking are higher than that?

waterlesscloud3• 15 years ago

The fact that this story generates so much excitement at 10 PM on Friday night says something about the community. Good things.

marcamillion3• 15 years ago

It sucks to be a graduate from Summer 2010. Missed it by 1 term.

gyardley• 15 years ago

Come now, you were admitted into a highly-competitive incubator that attracts a lot of investor attention and puts you in touch with some very valuable mentors.

The next term might be a bit better off, but it certainly doesn't suck to be you.

mickdj• 15 years ago

No it doesn't.

yef• 15 years ago

What would someone relentlessly resourceful do?

ebaysucks2• 15 years ago

This turn YC into a market index.

The payment pg and company receive for this service is the increased negotiation power in the deals they fund.

Theoretically this makes entire YC batches without a single dollar invested by YC itself possible.

nostrademons3• 15 years ago

It was always possible - the value proposition for YC has always been the advice, connections, and reputation from being associated with them. The monetary investment is just so that founders who wouldn't otherwise be able to do it (eg. those newly out of college) can take part.

blackrabbit• 15 years ago

This really is crazy. I'm sure this will only lead to i liar deals for TechStars and others. Angel Investing needs to evolve.

fedd• 15 years ago

Nothing stops Mr Milner from doing the same offer for TechStars companies, I guess

garply• 15 years ago

The recession is over.

pclark2• 15 years ago

I am most excited because this will mean hardware and oter "harder" things might be possible with less "baby steps" involved to get companies where they want to be - faster.

jackowayed2• 15 years ago

One potential issue I see is that YC companies might get complacent. I know that there are tons of factors that lead to the insane productivity that happens during YC, but I'm sure that the fact that many companies need to raise money or fail contributes.

Also, the money might keep people working on bad ideas instead of giving up and trying something new. Obviously they could pivot, but $150k gives them the ability to spend ~a year working on a bad idea before needing outside validation.

But I'm sure it'll be great for YC overall

kd5bjo• 15 years ago

It would go a lot farther than a year for a single founder, and even farther than that if they were willing to move somewhere cheaper than the Bay area.

JoeAltmaier5• 15 years ago

Fundraising is famously a huge hit to productivity. This should make YC founders an order of magnitude MORE productive.

KMStraub• 15 years ago

I think it will only separate the men from the mice.

d8niel• 15 years ago

Y combinator is doing an amazing job!

kevinelliott• 15 years ago

This is truly remarkable. Those of us yet to have submitted to YC now have an additional reason to do so. And it took a foreigner to do it. Po.iticians should take note, because this is how you stimulate an economy and innovation.

shareme• 15 years ago

I want ask an obvious question..

We have at this point in time, the lowest rate of success or ROI of the VC industry since stats were kept. It would seem to me that any deal whereas someone short-changes the process of getting to a Series A deal for any VC or group of VCs is somewhat dangerous of destroying the very model that got all of us here.

What steps are being taken to protect the 'YC-Combinator' VC and start-up incubaor model?

lyime• 15 years ago

Yuri Milner is a baller. That's all.

markessien• 15 years ago

Techstars is going to be unhappy about this. After one of their premier companies, SendGrid gets hit by the amazon announcement, YC closes this deal.

bourbaki• 15 years ago

Is YC become a bubble itself?

danest• 15 years ago

This is great for YC and the new companies coming out, congrats guys.

expressive• 15 years ago

I was planning to bootstrap my new startup I have in the works, but now I think I will apply to be among the next batch of startups to be funded by Y Combinator. I just woke up to this news, and what a lovely start to my day.

fromRussia8• 15 years ago

DST is a money laundering operation. Yuri Milner is a criminal.

I can't believe Paul Graham deals with these guys. He should understand that Russia is outside of his circle of competence. His smarts are not enough to make the judgement.

Russia gets roughly $90B annually for oil and gas. Most of the money gets stolen one way or the other and ends up in the funds like DST.

Dealing

fromRussia8• 15 years ago

Ternovskiy had told no one he was taking the Sunday-afternoon flight out of Moscow’s Sheremetyevo airport. But when he arrived in New York he found a car from Digital Sky Technologies, the Russian company, waiting for him at the airport. From the driver, he learned that an associate of Yuri Milner was already on his way to New York to talk to him. Back in Moscow, Milner repeatedly called Vladimir, a contemporary of his in college, and urged him to get his son to coöperate. Andrey, ensconced in a New York hotel, was scornful. “Is that even appropriate for an investor?” he asked me. “Harassing and hounding are the only words which come to mind.”

Andrey Ternovskiy is the founder of Chatroulette. And the excerpt above is from The New Yorker http://www.newyorker.com/reporting/2010/05/17/100517fa_fact_...

fromRussia8• 15 years ago

More here:

http://www.thenewamerican.com/index.php/usnews/politics/4346...

rudiger5• 15 years ago

Not unlike quantitative easing here in the USA resulting in peoples' pensions and savings being given to VCs and funds.

fromRussia8• 15 years ago

Indeed. All these lucrative google and microsoft stock options are eventually paid by people forced to sell their homes to pay for health care and food.

avner• 15 years ago

source?

fromRussia8• 15 years ago

http://www.rumafia.com/person.php?id=88

fromRussia8• 15 years ago

Good general overview of Milner and Usmanov:

http://www.thenewamerican.com/index.php/usnews/politics/4346...

fromRussia8• 15 years ago

Gary Kasparov has been uncovering similarities between Russian state and the structure of Cosa Nostra for quite some time. He continues this theme in the today's post on Davos and the BP deal.

http://www.kasparov.ru/material.php?id=4D43D80C5EB5D

In Russian, use google translate to read in English...

anti-fragile• 15 years ago

This makes sense. If the money is stolen, why would one care about any cap or discount?

Looks like PG got fucked. Now, YC companies are Milner's bitches. And what a cheap brothel it is, only $6M.

chmike• 15 years ago

Can someone explain what is a "convertible debt. With no cap and no discount" ?

aneth• 15 years ago

No more debates about whether YC is a "good deal" because of the low implied valuation of their initial investment.

This changes the character of the YC experience. YC companies can now spend their time on product, not fundraising. On the other hand, less financial pressure may mean the founders don't learn to hustle and act less lean.

k1ngpin• 15 years ago

Convertibles with no-cap, frothy valuations, great time to be an entrepreneur. I wonder if this is going to pressure other angels into offering similar terms, and I think if they try to then ultimately angels have the potential to get severely diluted in follow on rounds. I do think that this is a great PR move. Given the hands-off terms from Yuri, I highly doubt that this is a kiss of death for other large VCs who are looking to invest in the follow on rounds, I think it puts much more pressure on Angels who are looking to get into the seed round.

tmekjian• 15 years ago

I think this is fantastic. Whether it is this $150k or the great number of startups that are getting huge funding early on, it all means one thing... it is GREAT for business and competition.

I've heard from quite a few people who say this is a negative thing and they say it defeats the idea of being a startup. My question is, why do you HAVE to start in a garage? Why do you HAVE to eat Ramen noodles for 2 years? At the end of the day, being a startup is about having a creative team and being innovative.

This is a great step forward and if it helps a few more teams create a killer product then we all win.

Yuri Milner, SV Angel Offer Every New Y Combinator Startup $150k

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