[jparker165]

Right. All equity sold until this triggers takes a haircut.

This is especially weird if the 1.5% is taken post-money: companies will want to trigger the conversion as soon as they can reach the $100M valuation (or IPO in Canada even sooner).

[tomblomfield]

Yes - I was confused about this as well.

I would guess that YC's traditioanl initial 7% equity stake would typically be diluted to around 3-5% by the time a company sells or IPOs.

So 1.5% of sale/IPO is clearly less than that, but it still feels a bit weird.

[wasd]

Given the number of companies exit at 100m vs exit 1-99m is huge. They're taking a bet at the earliest possible time and are only making money in the case of extreme success.