YC is doing the VC job by curating and selecting good bets. LPs can go straight to these deals and avoid the middlemen. How is that going to affect the traditional LP > VC > startup model? Will LPs go straight to "top" accelerators and invest directly on these startups?
LPs investing in startups directly, followed by retail investors (JOBS act).<p>If you thought we were already in a bubble, hang on to your seats, it's about to get much worse.
For those unfamiliar with the term, a family office is (from my understanding speaking with a friend who manages one) a coordinated effort to manage wealth, ideally for current and future generations. At their more basic level they might passively invest in the share market and property, but they can be more active and pursue higher-touch investments in particular businesses, etc.
Slightly off-topic but is there any book or resource that a software engineer like me can read to understand the basics of how VC operate, what each round of funding mean, what one needs to know when one approaches a VC, difference between VC/LP?
I think it would be easier to get all these LP's, make a big fund and make follow-on investiment in all of companies portfolio.<p>better than a LP investing direct in a early-stage startup. This is bad for both, the startups gets an unexperienced investor and the LP don't get to manage portfolio the right way.
>...VCs treated their LPs a bit like mushrooms, keeping them mostly in the dark...<p>The full phrase is to treat your <insert business relation> like mushrooms: feed them shit and keep them in the dark.
Does this mean YC is shifting from an incubator to a more full fledged VC pipeline? Or is it just a lead generator for the YC companies to meet more investors?
> One Midwest LP who represents a family office and began receiving invitations to these affairs last year – one year after he began investing in privately held tech companies – has already backed a dozen startups out of YC. They represent one-third of his current portfolio of direct stakes.<p>> “I find [YC’s] batches are always the best of any accelerator class or demo day that I attend,” says the LP, who asked not to be named. “I’ve found a number of opportunities that were as exciting as any we’ve pursued.” YC’s endorsement, he says, is “a very important signal to us.”<p>An admittedly more cynical reading of this:<p>* Family office LP has very limited experience investing in privately-held tech companies.<p>* LP relies heavily on signals like "YC participant" because LP brings no unique investing insight to the table in this area.<p>The vast majority of LPs have no business investing directly in startups because they have no ability to add value to the individuals and institutions they represent, are incapable of performing adequate due diligence, and don't have the bandwidth or experience necessary to manage these kinds of investments.<p>Whether or not the current turmoil in the public markets is the start of something bigger or not, LPs itching to make direct investments strongly suggests that we are at or close to the peak in the current tech investment cycle.