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Ask HN: What's the ROI of Y Combinator investments?

4 pointsby longtermdabout 5 years ago

1 comment

westurnerabout 5 years ago
To calculate the ROI of YC investments, we could find the terms of the YC investments (x for y%, preference) and find the exit rate (what % of companies exit).<p>We could search for &#x27;ROI of ycombinator investments&#x27; and find valuation numbers from a number of years ago.<p>From the first page of search results, we&#x27;d then learn about &quot;return on capital&quot; and how the standard YC seed terms have changed over the years.<p>Return on capital: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Return_on_capital" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Return_on_capital</a><p>From the See also section of this Wikipedia page, we might discover &quot;Cash flow return on investment&quot; and &quot;Rate of return on a portfolio&quot;<p>From the &quot;rate of return&quot; Wikipedia page, we might learn that <i>&quot;The return on investment (ROI) is return per dollar invested. It is a measure of investment performance, as opposed to size (c.f. return on equity, return on assets, return on capital employed).&quot;</i> and that <i>&quot;The annualized return of an investment depends on whether or not the return, including interest and dividends, from one period is reinvested in the next period. &quot;</i> <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Rate_of_return" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Rate_of_return</a><p>From the YCombinator Wikipedia page, we might read that <i>&quot;The combined valuation of the top YC companies was over $155 billion as of October, 2019. [4]&quot;</i> and that <i>&quot;As of late 2019, Y Combinator had invested in &gt;2,000 companies [37], most of which are for-profit. Non-profit organizations can also participate in the main YC program. [38]&quot;</i> and then read about &quot;seed accelerators&quot; and then &quot;business incubators&quot; in search of appropriate metrics for comparing VC performance. <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Y_Combinator" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Y_Combinator</a><p>ROI is such a frou frou statistic anyway. What does that even mean, ROI? In any case, YC itself is not a public company, per se, AFAICT, so, it&#x27;s not so easy as going to <a href="https:&#x2F;&#x2F;YCharts.com" rel="nofollow">https:&#x2F;&#x2F;YCharts.com</a>, entering the <i>equity symbol</i>, clicking on &quot;Key Stats&quot;, and scrolling down to &quot;Profitability&quot; to review [Gross | EBITDA | Operating] [Profit] Margin.<p>The LTSE (Long-Term Stock Exchange) is where people who are in this for real are really doing it now.