On the surface, YCombinator IS giving a shitty deal. 6% for a few thousand dollars? That's highway robbery.
Except, of course, you're getting a lot more than money for your 6%. The difference is that YCombinator's promise are much less empty than that of a record labels.
(I know, I deflected. Milner's terms are not shitty. It's YCombinator's that are, but only on the surface).
When I first got into Y Combinator, our company with two founders straight out of college with no prior software engineering or startup experience and a prototype calendar demo was valued at 300k.
We were ecstatic. That was the best deal I've ever been offered in my life.
>On the surface, YCombinator IS giving a shitty deal. 6% for a few thousand dollars? That's highway robbery.
I think for most startups that haven't executed much, that's an incredible deal. Your idea that your two buddies just threw together, and maybe a prototype, is worth $250,000. Really?
(I know that some more mature companies have come to Ycombinator, companies likely worth more, but there are ycombinator companies that came fresh; so my assumption would be that the more mature companies would get a somewhat better deal than the brand-new companies. If that isn't the case, then it's possible that those more mature companies are getting the poor deal you are suggesting. But certainly for a fresh company, the ycombinator valuation, I think, is quite generous.)
Maybe it's just because I'm in a more traditional market, where people value you based on revenue, or maybe it's because I'm not that good, but it's taken me years of work to reach that kind of a valuation.
(on the upside, the valuations are somewhat, ah, less volatile in my industry. Assuming that my costs/revenues don't change sharply, the valuation of my company isn't going to change sharply. )
