Why $150k for YC companies is a huge deal

Reminds me of pgs "Fundrising Survival Guide":<p><i>"More often than not the company comes to a standstill while raising money. And that is dangerous for so many reasons. Raising money always takes longer than you expect. What seems like it's going to be a 2 week interruption turns into a 4 month interruption. That can be very demoralizing. And worse still, it can make you less attractive to investors. They want to invest in companies that are dynamic. A company that hasn't done anything new in 4 months doesn't seem dynamic, so they start to lose interest. Investors rarely grasp this, but much of what they're responding to when they lose interest in a startup is the damage done by their own indecision."</i><p><a href="http://paulgraham.com/fundraising.html" rel="nofollow">http://paulgraham.com/fundraising.html</a>

Student here.<p>What confuses me is why 90% of the companies, according to TechCrunch, took the funding. From what it seems like, the $150k is for each YC company to decide upon. Why now?<p>Surely most (if not all) YC companies don't need an additional $150k after just a few weeks in the program. It's great that the $150k is there for everyone when they need it. Raising money, which is usually a distraction, is now much more easily expedited.<p>While that's great, I just question the timing. Why did 90% accept the money now? No one needs it. Within the next few weeks, we might see better deals. Sequoia and others might want to compete. There might be better offers.<p>That's my one concern so far with this.

Agree with everything said here. The "being poor will make them work harder" might apply to other groups of people but the YC company founders are already working as hard as possible -- they are motivated to succeed and do their best.<p>With 3 founders this $150k is now enough for them to go through their cycle and go "ramen" level for another 6-12 months depending on the costs beyond food/rent of their idea.<p>Assume they need to start raising money 3-6 months before being out of cash and this gives them a good amount of time to do 100% product work then work with folks on funding without the pressure of "having to get the round done in a week or we can't make rent". With the ability to move the funding along at a reasonable pace some of the members can focus on still building product while one person leads the effort as well.

<i>I believe what you’ll see are more YC companies launching with bigger, more complete businesses. Notice I said businesses and not ideas, or features. </i><p>This is probably the <i>real</i> benefit of the 150k. Sure, the money will help to alleviate rent-worries, but it also lets founders tackle serious (more expensive) business problems.

Ok, I don't think $150k will actually make you less poor, nor make you work any less. What it does allow is a little more leeway, say if you have bills that need to be paid. Maybe you are not right out of college so car payments, house payments, etc... might need to be paid while you take 3 to 6 months off form work. I like that it shakes things up in the VC &#38; Angel world because they need to be shaken up. You are dealing with statups, you can't be risk averse... go invest in mutual funds if you don't want risk.<p>Congrats YC and Yuri, wise investments. Oh, this is not a bubble this is the same pattern that came about in the 1930's and 1940's with Great Depression and the auto industry. It's simply happening again with the internet industry (steam engine == bubble/economically unfeasible long term &#38;&#38; combustion engine == years of growth/redistribution of power and wealth; dial-up == bubble/economically unfeasible long term &#38;&#38; mobile/high speed == years of growth/redistribution of power and wealth)

One would think you could put the same amount of cash into just the winners at pretty similar terms. (Apparently, exactly the same terms for series A).<p>This implies that simply getting a spot at the table for a Y Combinator Series A has become prohibitively difficult, even for the likes of SV Angel.<p>Am I missing something? How does this work from the investor's side? Or is this just for-profit philanthropy?

Yuri Milner definitely guaranteed his spot in future articles about the '10 bubble.

I think there's something much simpler going on. If YC's track record has been pretty good (or at least, better than average), then Yuri Milner now has a pre-vetted list of companies in which to invest, without having to do any research at all. The simplicity of the strategy is actually pretty brilliant.

"I would say the fund raising thoughts, conversations, meetings stole 3-4 solid weeks of time that we could have been focusing on building an even better product."<p>- This is HUGE. If this speaks for the other companies then it means that everyone will have 25%-33% more time to build their product / customers / business.<p>"Funny thing is, anyone could have done this deal with the YC companies. You have to hand it to Yuri for stepping up and taking this risk. It will be a huge win for him and it is already a huge win for YC and the future of entrepreneurship in general. Congrats."<p>- Awesome.

Any explanation as to why other investors were not included in this deal? I understand this is a huge deal but being able to select an guaranteed investor from a panel seems like it would be beneficial to both sides?

Am i the only one who has the feeling that if you are already in an ecosystem where you need _3 weeks_ to raise a perfect ("silicon valley level") angelround you even almost not need the 150k$.

<p><pre><code> div.entry-content { letter-spacing: 1px; } </code></pre> Why? It makes this text harder to read!

I'm wondering about the 10% who didn't take the money and if there is adverse selection at play here.

can someone explain to me please how exactly are these money given? The startups receive the $150k in exchange for a percentage, or how ? I keep hearing the "no cap" and "no debt" thing, but I can't figure out what that means.<p>Thanks!