What Insiders Think About YC's New Deal Terms
Y Combinator's decision to invest $500,000 could elbow out angel investors
The news that Y Combinator has decided to change its deal terms is about as earth-shattering as Sequoia Capital restructuring its investing apparatus — and we’ve now seen both happen within a few months of each other.
It’s a sure sign that even the most secure investors — we’re talking Silicon Valley royalty — realize that they have to keep changing with the times.
If you missed the news this morning, Y Combinator is going to start investing $500,000 in startups in its accelerator — up from $125,000.
Michael Seibel @mwseibelWe have a little news to share: https://t.co/nvSoJfXvgW
YC is still going to take 7% of a company when it joins the YC batch — but now YC is also going to take another chunk of the company when the startup raises its next fundraising round.
The [Most Favored Nation] safe will take on the terms of the lowest cap safe (or other most favorable terms) issued between the start of the batch and the company’s next equity round. Simply put, we’re giving the company money now but at the terms you will negotiate with other investors later.
I messaged with startup founders, venture capitalists, and other people close to the YC universe. Whether or not this is good news depends on where you sit in the startup ecosystem: