One thing that hasn't been mentioned much is that, after making such a significant financial commitment, Yuri Milner/DST will probably have some say in who gets picked for YC. Does this mean that the next batch of YC startups will be more closely aligned with those investors' goals? For example, DST has pledged to invest heavily in social media. Does that lead to more social startups in the next batch? Would YC still fund, say, a hardware or enterprise software startup?
No, of course not.<p>I don't know if people realize this, but there is no actual deal between Ron/Yuri and YC. The deals are between them and the startups. We liked their plan of investing in all the startups, so we called a meeting for them to present it. But we don't have any control over which investments the startups accept. Anyone who wanted to do what Ron and Yuri have done could have done it at any time, whether YC liked the idea or not, simply by making the offer publicly.<p>While we're on the subject, Sequoia, which we do have a deal with (they're our biggest LP), also doesn't have any effect on the startups we pick.
It will probably change who <i>applies</i> more than it will change who gets accepted. A lot of people reason that YCombinator is 6% of your company for ~$20k, are discouraged by the implicit valuation, assume (incorrectly) that the other parts of it probably aren't worth very much, and discard the idea of applying to YCombinator. This deal makes it obvious there's more value than the initial investment and makes application more compelling.
pg, you've mentioned that you're happy with the development and think it's a boon for YC companies. Did Milner/DST approach you before hand to gauge your interest, or did they essentially do this independently?