I think the biggest opportunity for seed investors today is actually in bio, but most people won't touch it as there's a perception you have to be a dr or phd to know the space. Which is an unfortunate misconception, bc the opportunity is huge. A program educating seed investors on bio would be super valuable
Biotech venture returns have outperformed techs in recent years, with more IPOs, higher m&a returns and shorter time to exit. Counterintuitively for those who think bio is too capital intensive and it takes too long to get drugs approved, the best exits have been early stage deals where under $20-30M is invested
I know a few seed investors who've had several high multiple exits less than 18 months from seed, including one that sold for over $1B in less than 18 months
Despite this exit environment, the number of seed / early stage investors in biotech has not grown in over a decade. VCs have responded by just seeding / starting companies in house, but there are tons of great seed stage companies that just go unfunded bc people are intimidated by biotech
I am a seed investor, a former academic in the area of biotech, an experienced biotech entrepreneur, and I won't touch biotech with the proverbial 10 foot pole.
The reason why is my fellow investors don't have a clue and so back all the wrong companies. If you try and pick the good ones the end result is they run out of money while the ones that hype garbage to the moon suck up all the cash. I should say this is an Australian perspective and I do realise that in other markets things might be different.
Just adding my own slight perspective here. We launched a bootstrapped genome sequencing facility August last year. With barely any advertising and word of mouth, we're clearing around 8% MoM revenue growth and are forecasting ~$350k-400k in revenue this year.
Biggest problem? We don't have enough float to keep up with demand. There's significant demand in the life sciences & biotech space right now - especially with the confluence of software and bio. It's been very hard to talk to investors because (no offense) they hear life sciences, bio, genetics, etc. and they turn away because it's out of their comfort zone of investing.
If you're an angel or seed investor, I'd highly recommend diving in and learning more around the problems of the space. They are large, lucrative, and have high probability of disruption compared to current status.
Have $1 million in assets outside of your primary home or make $200k+ per year for the last 2 years with the reasonable assumption you will continue to.
I've done >20 seed investments, and here is my Rule #1: you can do seed investing as a hobby, or you can do it as a business.
If you do it as a hobby, count on losing every penny you put in, and treating that as the cost of pursuing your hobby.
If you do it as a business, count on working on it full time, i.e. AT LEAST 40 hours a week, and probably more like 60-80. The competition is fierce. And I would not do it with less than $1M in LIQUID assets which I could afford to lose. The reason you need this much is that in order to have a good shot at a return you need to be able to do two things: 1) invest in a pretty broad portfolio (i.e. at least 10 companies) and 2) have enough money to participate in follow-on rounds so you don't get diluted into oblivion.
Maybe for post seed rounds or seed funding greater than $5M, otherwise I don’t understand the need (or rule) for limiting seed funding to accredited investors.
I’m surprised YC has that as a requirement to participate in demo day, seems kind of archaic for a disrupter.
This strikes me as a very odd class for them to be doing.
1. YC has no problem filling up Demo Day, and I know of even high qualify, professional angel investors who don't get the in person invite. So it isn't like they have a shortage of angel investors. If they wanted to have more and more diverse angels at their event, they could just find a bigger venue, which YC seems averse to.
2. Isn't this a big conflict of interest? This is a company teaching me the basics of angel investing who conveniently happens to directly financially benefit if there are more angel investors pumping money into their companies. Now I'm sure the class will be done well because YC generally does that, but I'm surprised YC is even wading into this. Angel investing is either a bad or at best extremely risky way for the average (even rich) person to invest their money in. Hopefully YC has a lot of disclaimers at the beginning of this class about this fact. I'm all for more information being out there, but angel investing is the type of thing where depending on which facts you omit you can make it seem very different from what it is.
My first thought is that YC considers 2 to not not be a conflict of interest because of 1. They don't need more funds for their startups; this is just a donation of knowledge to the world to help Angel Investors get more money to the right startups, (presumably) making the world better for everyone.
Timing could not be more perfect for this. There's a new generation of investors out there. Some flush with cash from crypto trades. Others simply benefiting from the record bull run in tech stocks. That are now seeking to re-invest. Get in on the ground floor. And discover the next great opportunity.
There is a decided lack of investor education. As well as rigor. And opening up YC's methodology will have as large an impact as the introduction of convertible notes. Further, introducing new investors to how their money can be used for maximum impact and progress. Which naturally leads to outsized IRR. Will steer them away from the pitfalls of say, going all in on their best friend from junior high school's BBQ-flavored tequila distillery.
And regarding the sourcing of dealflow. There are definitely myriad untapped ways for the greater YC community to introduce talented startup founders and seed stage investors. AngelList is fantastic. The ability to post MVPs to ShowHN is tremendous. But something like a curated Youtube channel or Twitch livestream where people can pitch or watch demos 24/7 around the world at their convenience would be amazing.
I really hope that they will manage to reach a large audience with this, early stage investors are more often than not even more clueless than first time founders.
Educating both groups goes a long way towards getting everybody on the same page.
YC is surprisingly unambitious. They have access to unlimited amounts of capital and do almost nothing with it. Maybe because they compare themselves to the truly terrible investors they're surrounded by, and so it feels ambitious by comparison?
This announcement should be about a new $1 billion fund that they're going to use to deputize and train a thousand new angel investors. Or at least something big enough to move the needle.
Observing YC's evolution is a bit like watching someone take over Philip II of Macedon's empire and using it to march around Greece in circles.
I would argue YC is extremely ambitious, especially under Sam Altman. However, ambition doesn't have to mean immediately investing billions of dollars in new areas. Huge ambitions can start as small experiments to see what's promising. That's how YC itself started too. Like a startup.
Step 2: Put that money into opportunities prescreened by YC.
A lot will fail but there's a few exponents in there too so you can just shotgun anything interesting. Also don't worry if you miss the first round. There's several more rounds before the public gets any chance to invest - if they ever do at all.
[+] [-] aaavl2821|8 years ago|reply
Biotech venture returns have outperformed techs in recent years, with more IPOs, higher m&a returns and shorter time to exit. Counterintuitively for those who think bio is too capital intensive and it takes too long to get drugs approved, the best exits have been early stage deals where under $20-30M is invested
I know a few seed investors who've had several high multiple exits less than 18 months from seed, including one that sold for over $1B in less than 18 months
Despite this exit environment, the number of seed / early stage investors in biotech has not grown in over a decade. VCs have responded by just seeding / starting companies in house, but there are tons of great seed stage companies that just go unfunded bc people are intimidated by biotech
[+] [-] danieltillett|8 years ago|reply
The reason why is my fellow investors don't have a clue and so back all the wrong companies. If you try and pick the good ones the end result is they run out of money while the ones that hype garbage to the moon suck up all the cash. I should say this is an Australian perspective and I do realise that in other markets things might be different.
[+] [-] rfc|8 years ago|reply
Biggest problem? We don't have enough float to keep up with demand. There's significant demand in the life sciences & biotech space right now - especially with the confluence of software and bio. It's been very hard to talk to investors because (no offense) they hear life sciences, bio, genetics, etc. and they turn away because it's out of their comfort zone of investing.
If you're an angel or seed investor, I'd highly recommend diving in and learning more around the problems of the space. They are large, lucrative, and have high probability of disruption compared to current status.
[+] [-] psadri|8 years ago|reply
[+] [-] billmalarky|8 years ago|reply
Have $1 million in assets outside of your primary home or make $200k+ per year for the last 2 years with the reasonable assumption you will continue to.
[+] [-] lisper|8 years ago|reply
If you do it as a hobby, count on losing every penny you put in, and treating that as the cost of pursuing your hobby.
If you do it as a business, count on working on it full time, i.e. AT LEAST 40 hours a week, and probably more like 60-80. The competition is fierce. And I would not do it with less than $1M in LIQUID assets which I could afford to lose. The reason you need this much is that in order to have a good shot at a return you need to be able to do two things: 1) invest in a pretty broad portfolio (i.e. at least 10 companies) and 2) have enough money to participate in follow-on rounds so you don't get diluted into oblivion.
[+] [-] will_brown|8 years ago|reply
I’m surprised YC has that as a requirement to participate in demo day, seems kind of archaic for a disrupter.
[+] [-] Alex3917|8 years ago|reply
[+] [-] jacquesm|8 years ago|reply
[+] [-] louprado|8 years ago|reply
[+] [-] simonebrunozzi|8 years ago|reply
[+] [-] orarbel1|8 years ago|reply
[+] [-] birken|8 years ago|reply
1. YC has no problem filling up Demo Day, and I know of even high qualify, professional angel investors who don't get the in person invite. So it isn't like they have a shortage of angel investors. If they wanted to have more and more diverse angels at their event, they could just find a bigger venue, which YC seems averse to.
2. Isn't this a big conflict of interest? This is a company teaching me the basics of angel investing who conveniently happens to directly financially benefit if there are more angel investors pumping money into their companies. Now I'm sure the class will be done well because YC generally does that, but I'm surprised YC is even wading into this. Angel investing is either a bad or at best extremely risky way for the average (even rich) person to invest their money in. Hopefully YC has a lot of disclaimers at the beginning of this class about this fact. I'm all for more information being out there, but angel investing is the type of thing where depending on which facts you omit you can make it seem very different from what it is.
[+] [-] ErikVandeWater|8 years ago|reply
[+] [-] kul|8 years ago|reply
[+] [-] indescions_2018|8 years ago|reply
There is a decided lack of investor education. As well as rigor. And opening up YC's methodology will have as large an impact as the introduction of convertible notes. Further, introducing new investors to how their money can be used for maximum impact and progress. Which naturally leads to outsized IRR. Will steer them away from the pitfalls of say, going all in on their best friend from junior high school's BBQ-flavored tequila distillery.
And regarding the sourcing of dealflow. There are definitely myriad untapped ways for the greater YC community to introduce talented startup founders and seed stage investors. AngelList is fantastic. The ability to post MVPs to ShowHN is tremendous. But something like a curated Youtube channel or Twitch livestream where people can pitch or watch demos 24/7 around the world at their convenience would be amazing.
[+] [-] jacquesm|8 years ago|reply
Educating both groups goes a long way towards getting everybody on the same page.
[+] [-] staunch|8 years ago|reply
This announcement should be about a new $1 billion fund that they're going to use to deputize and train a thousand new angel investors. Or at least something big enough to move the needle.
Observing YC's evolution is a bit like watching someone take over Philip II of Macedon's empire and using it to march around Greece in circles.
[+] [-] GraffitiTim|8 years ago|reply
[+] [-] jameslk|8 years ago|reply
[+] [-] sandslash|8 years ago|reply
[+] [-] whataretensors|8 years ago|reply
Step 1: Be born into money.
Step 2: Put that money into opportunities prescreened by YC.
A lot will fail but there's a few exponents in there too so you can just shotgun anything interesting. Also don't worry if you miss the first round. There's several more rounds before the public gets any chance to invest - if they ever do at all.
[+] [-] conanbatt|8 years ago|reply
[+] [-] Dowwie|8 years ago|reply
[+] [-] jzamora|8 years ago|reply
[+] [-] jacquesm|8 years ago|reply
https://apply.ycombinator.com/events/149
[+] [-] beambot|8 years ago|reply
[+] [-] sandslash|8 years ago|reply
[+] [-] jacquesm|8 years ago|reply
[+] [-] kalal|8 years ago|reply
[+] [-] fudged71|8 years ago|reply
[+] [-] sandslash|8 years ago|reply
Apologies for that!