Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

https://news.ycombinator.com/item?id=3820

by amichail • 19 years ago

10 25 19 years ago

news.ycombinator.com

amichail• 19 years ago

Since advice and connections are the major benefits of Y Combinator, why not take on many more startups without funding most of them at all?

I suspect that many people would be happy with such an arrangement and Y Combinator may end up making quite a lot more money as well.

pg4• 19 years ago

Because (a) putting our own money in is a test of our commitment and forces us to pay attention, and (b) a lot of the founders would be distracted by money issues and wouldn't be able to focus on their startups.

RyanGWU82• 19 years ago

Two hypotheses:

1.) Y Combinator's advice and connections are a limited resource. There are only so many phone calls their partners can make in a day. Y Combinator's business is not scalable unless they generate more y combinators.

2.) Y Combinator's application process allows them to invest in startups that are most likely to succeed. If they spread their resources around a larger base of companies, they would be investing in startups less likely to success. With more failures, their return on investment would fall, not rise.

pg4• 19 years ago

Actually the scalability of YC is a fascinating question. As hackers we're always thinking about that. And of course as hackers we have ideas about how to do it. We've been gradually growing the number of startups in each batch. But we often speculate about what we'd have to do to fund, say, 1000 startups per year. There has to be some way to do it. Whatever the answer is, it would be something to see, wouldn't it?

pixcavator• 19 years ago

Makes sense to me. But my guess is that time would be an issue.

danw3• 19 years ago

Sound good in principle but there are a lot of people who want advice. You need to find a way to prioritise who would benefit most from your advice and connections. What better way to decide than to ask yourself "Who would I invest in?". Then you're back at the YCombinator model.

If someone can figure out how to make this work then great. I'm not sure YC will work without you narrowing applicants down and giving them money.

Perhaps instead of having a single team who advise founders you could have a self supporting community. Put all the startups in a coworking/barcamp like environment for a summer and tell them to help each other out and to share connections. It would be interesting to see how well they could do on their own. You still have the problem of where they would get money to stay alive without funding.

[sorry if this is incoherent, I'm sleepy. Will edit to make sense in the morning]

jwecker• 19 years ago

While it sure is generous and I'm sure the founders appreciate it, a couple of months worth of rent and ramen noodle money isn't really funding a company. What you describe is already what YC is- it's just making sure that you are available full-time to really do something about the advice and contacts. :)

brett• 19 years ago

Yeah, given the amount YC gives it's as if they just want to make sure poorer founders won't have to get day jobs in the time they've alloted to impart advice.

pg4• 19 years ago

That's exactly how we look at it: the most important thing we offer is advice and connections, and the money is just to pay your living expenses so that you can focus entirely on the startup for long enough to get it properly launched.

It always annoys us when people say YC is a ripoff because we want an avg of 6% of a co for $15-20k. One reason we don't argue (much) with people who say that is that we treat the question as a sort of preliminary IQ test in the application process.

volida2• 19 years ago

I don't think the money is the issue here, which results to many companies being funded because of the relatively low cost for them to bring up to life startups, comparing to VCs.

So, they invest enough money to get u going. Their actual contribution is their network and their guidance, which isw hat consumes their time and what everyone applying wants.

So, the quantity and the limit of the "many people" is relevant to how big YC is and how many people they find worthful to invest.

jamongkad• 19 years ago

I myself rank advice and connections a little more important than the money itself. That's what really pulled me here to Y Combinator in the first place.

danielha• 19 years ago

YC-organized Startup School supplies advice to a larger audience, along with a chance for connections. I'd also contend that news.yc is another such tool offered by YC.

The summer/winter batches are a chance for picked companies to receive specialized attention. YC can't do that for everybody.

JoeEntrepreneur• 19 years ago

Wouldn't it be in YC's interest to take some equity WITHOUT providing any funding in return of advice, Guidance, and a platform and connections.

Y Combinator-like without funding but with advice, connections, and stock in the startup (what would happen?)

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