YC has just closed a new $8.25 million fund

[staunch]

I'm hoping we'll eventually see some experimentation with the model, now that they have more money to work with.

I've always believed there's room for a YC-like company to do slightly bigger investments. Instead of $17k for 2 founders, it would be $80k for 2 founders. That way they could attract people with higher cost of living/high paying jobs (who would hopefully tend to be more successful due to more experience/connections/stability)

[pg]

Actually given an incremental dollar to invest I'd always prefer to expand sideways rather than depthwise. It's much more interesting to fund a whole new startup than to give more money to an existing one.

Plus the startups themselves don't need that as much; there are already lots of investors ready to give the next $100k to startups we seed.

[webwright]

Supply/demand. Why would YC (or ANY early stage investor) ever want their money to go to your higher cost of living when they have a line out the door of great opportunities founded by people who have a cheaper lifestyle and/or a pile of personal savings?

The answer, of course, is "they'd do it if it was an unusually good startup with TONS of traction." Of course, if you're in that boat fundraising isn't a problem, is it?

[crystalis]

There's another benefit to doing $17k/2 - you get to build up your YC alumni at over four times the rate of $80k/2.

[char]

If the goal of funding $80k is to attract more experienced founders, it seems to me that by default, those founders would be better suited for different investors anyway. YC is largely about helping founders learn how to start a business, and connecting them with more experienced people (and with each other).

I'm also having trouble understanding what 2 people would do with that much money in only 6 months. I would argue that the 'stability' factor would make them less likely to work as hard as the other companies who are highly motivated to pay their bills in that time period.

[spoiledtechie]

Its a big reason why I can't do it. I have bills that must be paid. Student loans and they are larger than most everyone I come across.

[qeorge]

Looking at it from a money perspective is backwards. The idea is to pay your living expenses so that you can focus, not give you any kind of salary (at least that's my understanding).

The rate seems like a good commitment filter as is.

[dariusmonsef]

If you believe enough in what you're building that you're willing to ruin your credit... than you have the proper motivation. If you are getting paid well enough to stay financially fat & happy, what risk are you taking? What will keep your head & heart in it after you've hit your first road bump... or wrecked around the first blind curve?

In my experience... everyone can get their expenses lean. Just depends on what you're willing to give up. For those with families that's a bit harder.

[bkrausz]

That should keep YC going practically indefinitely :).

Assuming the data at http://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l1... is complete. And assuming a $17k investment for 6% from all the companies who have exited (I know, big assumptions):

  207 investments @ $17k is $3.5m
  13 exits @ $69m total is $4.1m for YC

That means that YC is probably close to breaking even already, plus they have all their equity in a ton of successful companies that haven't exited yet.

I don't know much about investing, but at this rate $8.25m should keep them going for quite some time.

[joshu]

Funds don't generally work that way. They return the investment to the investors. When the money is done they raise a new fund.

(This isn't absolute. There are evergreen funds that have the returns go back into the fund.)

[jedc]

I'm the guy who maintains that spreadsheet, and do try to keep it up to date.

But my huge disclaimer is that the exits are _my_ guesses only, and are likely wildly off the mark. But I keep it since I think my errors potentially cancel themselves out in aggregate, and it's useful to estimate the financial return YC has had thus far.

[abstractbill]

Congrats pg, jl, tlb and rtm! 70 startups per year is an amazing number - how long before YC is involved in practically every startup in Silicon Valley?

[pg]

I couldn't resist calculating the answer to your rhetorical question. It depends how many startups get started each year in SV of course. If the answer is 1000 and we continue to expand at 1/3 per year, then 12 more years. But since we could never get all the startups, what this calculation really proves is that our growth rate is going to have to slow down at some point within the next 12 years.

Unless of course there start to be a lot more startups, which is a real possibility.

But it's alarming to think what sort of monstrosity we'd have to evolve into in order to fund 1000 startups a year.

http://upload.wikimedia.org/wikipedia/commons/b/b7/B-24_Libe...

I doubt I'd want to run it.

[tansey]

Coming from the hedge fund world, $8.25M seems so small. It's amazing how much it can fund.

What are the requirements for becoming part of the next YC round?

Do you have to know someone already involved with YC?

Does YC only accept investors who are successful tech entrepreneurs?

What about people who have the money through other means and are tech savvy?

Can investors send a proxy who is qualified at helping out?

[pg]

Basically, we just ask our friends, who mostly turn out to be hackers.

[jazzychad]

Posterous's removal of decimal points from titles makes for an interesting permalink :)

[pg]

I noticed that when I sent the link to the YC partners. It was interesting how horrifying it seemed.

[sadiq]

I'm wondering, will YC's current setup scale with the increase in numbers? As in, will new YC companies have less time with staff, etc..?

How do you plan to cope with this?

[pg]

I think the reason people are surprised that we fund so many startups compared to other YC-like organizations is that I work full time on this, whereas at nearly all (perhaps all) the others, the startups are advised by a consortium of people doing it part time. When you're doing it full time, it's no problem to advise, say, 25 new startups at once. At least once you have some practice.

Earlier this year we hired Harj Taggar who also works full time advising startups. Since this kind of work scales nearly linearly, we're about as busy as one person would be advising 18, which was no problem at all.

[rewind]

Perfect timing -- I was just finishing my 93-page business plan and the last line of my nine pages of Excel spreadsheets told me I needed $8.25 million. I'm definitely applying for the next round.

[paraschopra]

You can definitely fund more startups but as you admit yourself, the startups you fund don't give up equity for money. They give up equity for your guidance, network and the whole ethos of the program.

Scaling up the YC experience would be an interesting challenge.

[gcv]

The previous YC funding cycle, winter 2010, had 27 startups. Already 20 of them (74%) are either profitable or have commitments for further funding.

That's amazing. Congratulations.

[johnrob]

8.25 million / 20 K per startup = 412.5 startups!

[pg]

Sadly, you are forgetting our operating expenses. We calculate it will fund around 240.

[henning]

The way I see it, there's no way to show confidence in the future like putting your own money up. This is great even for people not affiliated with YC, its partners, or YC-funded startups.

[jagjit]

It is very heartening to know that many YC winter 2010 startups are already profitable.

Is more information available on profitable YC companies so far? And how they got to cash flow positive.

[andrewhyde]

Congratulations! Can't wait to see the new classes and what they do to evolve the web.

[daniel-cussen]

Is it possible to defer YC?

[pg]

We don't have a policy about it. No one has ever wanted to. We do sometimes defer interviews.

[breck]

It was possible in Winter 2009, I think (the first session after the economy collapsed), but I don't think anyone did.

[OoTheNigerian]

pg, is there any possibility of expanding YC outside the US?