Current value of the top 30 YC companies is about $575B

https://twitter.com/paulg/status/1455102046902816775

by sillysaurusx • 5 years ago

99 51 5 years ago

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karimf2• 5 years ago

Anyone has any idea how much percentage YC has for those companies on average?

Sebb767• 5 years ago

See here: https://www.ycombinator.com/deal/

It's 7% pre-dilution. Given the value of the companies, however, that's still a solid share.

karimf2• 5 years ago

Yes. Is there a way to calculate after dilution, or is it impossible without knowing the cap table of each companies?

tomhoward• 5 years ago

They take 6-8% when they first invest, but then they get diluted down by later investments, though they also have the Continuity fund that participates in later rounds, so that reduces the dilution.

On average it’s probably 2-4% by the time companies get past $1B cap.

santiagobasulto2• 5 years ago

Starts with 7% of (I think) common stock. Then there's dilution on each following round.

But I think YC started with the SAFE so they could match in higher rounds (with preference price) and avoid diluting. But I'm not sure at all, someone else might know better.

1cvmask• 5 years ago

This is Paul Graham tweet in full:

Someone asked what the total value of YC companies was, so I tried calculating it. The current value of the top 30 is about $575 billion. When we started YC, I would have been astounded if you'd told me it would one day be $5.75 billion.

The remarkable thing about YC is that they truly innovated on the schooling aspect of venture and transformed the meaning of accelerator to business flywheel.

For high school students with aspirations in the tech field it is like the MIT, Caltech and Stanford all rolled into one.

tester7562• 5 years ago

For high school students with aspirations in the tech field it is like the MIT, Caltech and Stanford all rolled into one.

What does it mean?

does PG teach maths and stuff? (/s)

napoleoncomplex2• 5 years ago

I think it's meant as a comment on how much opportunity in the startup/VC world being a part of YC brings to one's life/career. You get access to great mentors/ex-founders with their strong networks of influence, you work alongside other above-average entrepreneurs, you present in front of a huge and reputable audience of VCs, wearing YC's stamp of approval, and on and on... It's like winning the opportunity lotto, much the same as with those top-tier universities, where the brand and the network is more than half the value, not the lectures themselves.

choppaface• 5 years ago

For high school students with aspirations in the tech field it is like the MIT, Caltech and Stanford all rolled into one.

not anymore. the bar for the batches in the last few years has dropped substantially. even former YC founders have shared this observation. that’s likely inevitable through scale and the investors getting rich and … busy with being rich.

don’t compare YC to a 100+ year old university. the incentives and timelines are wildly different. there will always be a segment of ambitious people who chase a brand no matter the field. there are many who covet YC like a McKinsey or Goldman or Supreme Court clerkship, but YC isn’t like any of those either.

mbesto2• 5 years ago

The remarkable thing about YC is that they truly innovated on the schooling aspect of venture and transformed the meaning of accelerator to business flywheel.

What exactly is the innovation? Don't get me wrong, YC as an investor is truly compelling but I don't see anything uniquely innovative about their "schooling aspect". They are commercially successful because they have the largest and greatest deal flow engine in tech venture.

For high school students with aspirations in the tech field it is like the MIT, Caltech and Stanford all rolled into one.

Precisely - it carries a level of prestige that those schools also have - a signaling towards bigger investors if you will. Some of Silicon Valley's most successful engineers went to U of I, which also has an incredible comp sci degree, yet MIT/CalTech/Stanford aren't innovating their curriculums any better, they just have a more prestigious name.

lordnacho• 5 years ago

What exactly is the innovation? Don't get me wrong, YC as an investor is truly compelling but I don't see anything uniquely innovative about their "schooling aspect". They are commercially successful because they have the largest and greatest deal flow engine in tech venture.

I think it's in the "here's how to do it" aspect that's innovative, if you can call it that. Before YC you easily ran into the myths like "you have to have a great idea" or "keep everything secret or you'll get scooped". There was no player that was clearly and loudly saying "It won't work every time, but here are some learnings about capital structure, marketing, hiring, etc, and here are some people you can talk to, now go and give it a try."

Was YC the first? Probably not. Was the message new? Probably not. But it was out there being very open about it, and I think that helped a lot of people.

almeria• 5 years ago

For high school students with aspirations in the tech field it is like the MIT, Caltech and Stanford all rolled into one.

It may be sort of comparable to that in terms of fostering startup-oriented skills and business connections.

If that's your only measuring stick, that is.

But in terms of developing a solid intellectual foundation for dealing with the world (which just so happens to involve other aspects than the skills necessary to create a hot tech startup) -- just on first principles - there's no way the educational benefit of an accelerator program can compare with the core foundational training of top-tier 4 year STEM program. You know, in things like math, science, and yes, liberal arts and overall personal development.

dragonwriter• 5 years ago

transformed the meaning of accelerator to business flywheel.

Something that accepts energy and returns it later with some losses?

santiagobasulto2• 5 years ago

Airbnb's current market cap is ~100B. How much do you think is Stripe worth? I think Stripe doesn't go public because it'd just break the market; pop the bubble.

arnvald• 5 years ago

Earlier this year (Q1) they raised another round at ~100B

beckman466• 5 years ago

Being a middleman has never been more profitable

boringg• 5 years ago

How would it break the market? Stripe is going to be one of the biggest IPOs for sure when it goes shortly

mxschumacher2• 5 years ago

so a little more than one fifth of Microsoft

blowski3• 5 years ago

Which is really impressive when you think Microsoft is probably made up of 100s of companies, and has itself been around for more than 40 years. I guess it's one of those numbers that - if you zoom out over the last 150 years - shows how much tech has taken over the world.

mxschumacher2• 5 years ago

I'm a hesitant about using "tech" and "software" as equivalents. Pharma, Oil & Gas and the car industry are all high - tech for example.

What is unique about Microsoft and other large "tech" firms is that they are natural oligopolies that have very low distribution cost and become more valuable as they get bigger. They benefit from massive network and platform effects (the world is running on Excel, all companies are moving towards the cloud, there are only two mobile operating systems, Metcalfe's law drives social media company valuations). These companies are very valuable, because they are very profitable. They are very profitable because they're hard to compete with. Google couldn't make a dent in social media, Microsoft failed in search and mobile, Amazon couldn't get into mobile etc)

In cars, almost nobody really makes money over the long term, all profits are competed away. But the car industry is gigantic, GM's revenue is only a little bit smaller than than of Microsoft. It's a high capex, low profit industry and many incredibly strong players exist. Great for consumers, bad for capitalists.

ak_1113• 5 years ago

Anyone wants to try and make an educated guess how much YC's market cap would be worth if it was trading on the stock market (similar to Berkshire Hathaway)? My estimate would be something like 25-30B.

edwnj• 5 years ago

100B+..

Stocks usually trade multiples of their net worth and revenue and this is especially high for tech companies.

Also I cant imagine a more accurate index to put in your portfolio for tech startup exposure and when you consider the number of people who want exposure but is not accredited, its not a stretch to see a 100B+ market cap.

Not to mention the hype, prestige and track record of YC. Basically every investor attends demo day has a pretty good reason to buy some YC.

raesene93• 5 years ago

Looking at the publicly quoted YC companies from this list https://www.ycombinator.com/topcompanies they have a combined market cap of $297.18b and in 2020 their combined losses were $5.5b.

only one of the 10 was profitable (coinbase)

Seems like market valuations aren't that closely tied to profitability at the moment...

ak_1113• 5 years ago

This is very common for tech stock, not a YC problem. Even Tesla was barely profitable until very recently, while Amazon spent the first 20 years of its existence barely breaking even.

raesene93• 5 years ago

People often use Amazon as an example of why start-ups don't need to be profitable, but I'm not sure it's a good example.

Amazon wasn't profitable (at least in part) because it was building a massive network of warehouses, datacentres and logistics systems, that provide a large competitive moat.

That's not the case for most (or possibly even a majority) of start-ups.

The standard reasoning is that we're pricing in future growth. but once a company fills most of it's market sector and stops growing, that rational makes less sense.

belter• 5 years ago

It is a problem caused by the loose monetary policies of Central Bankers, causing the current state of the stock market, one of the biggest bubbles ever.

So its is not a YC problem. It becomes a YC issue, if that is the core metric by which the quality of its business building model is evaluated.

mbesto2• 5 years ago

Seems like market valuations aren't that closely tied to profitability at the moment...

This trope needs to die. Not all "profitability" is the same.

A few things to note:

- "You will see many people talk about Amazon’s focus on “growth” vs. margins, but the right focus is instead absolute dollar fee cash flow."[0]

- SaaS revenue is different.[1]

- NetSuite's most profitable year was in 2009 (yes that 2009 when the great recession happened) because they simply turned off the S&M engine. [2]

[0] https://25iq.com/2014/04/26/a-dozen-things-i-have-learned-fr... [1] - https://a16z.com/2014/05/13/understanding-saas-valuation-pri... [2] - https://soundcloud.com/a16z/a16z-podcast-why-saas-revenue-is...

hnmullany• 5 years ago

Has YC ever published a full retrospective of the YC classes by cohort: for every class showing last company valuation or year of exit (M&A, acquihire, shutdown)?

sillysaurusx• 5 years ago

Actually, I remember a website that did exactly that. It wasn't affiliated with YC, but it was a spreadsheet that listed all of those metrics (alive/dead/acquired, most recent funding round, acquisition price, etc)

EDIT: Found it: https://yclist.com/

It doesn't the show most recent funding round. I guess that was just something I've always wanted. (You'd get so much data about each company's trajectory...)

Their github has a .txt file for each YC batch from 2005 through 2017 too, which is pretty neat: https://github.com/linrock/yclist/tree/master/companies

drumhead• 5 years ago

Its a bubble inflated by some of the loosest monetary policy in history. Caveat emptor etc, etc.

mdorazio• 5 years ago

Now, what's the value of the bottom 300 YC companies? The median value of YC companies? I think we all know the answer, but it would be nice if pg gave an accurate assessment of how the VC funnel works and the actual likelihood for a founder to get to even a $100M company level.

exogeny• 5 years ago

The implication of course is that YC is great at picking companies, which is assuredly true. But they also fund what, like 200 per session? Do not discount the degree in which quantity plays a part here.

Current value of the top 30 YC companies is about $575B

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