The YC VC Program

26 November 2012

Two years ago Yuri Milner and Ron Conway formed an informal coalition to invest $150k in every startup we funded. Although we didn't organize this program, over the years we ended up de facto managing it, and it was awkward to manage something we hadn't started. So we decided to take control of the situation and replace it with something of our own design.

The new version involves less money and more engagement. The VCs will invest $80k in each startup instead of $150k, and we'll organize sessions of office hours in which partners from the VC firms advise the startups in each batch. As before, the investments will be done as convertible notes with no valuation cap and no discount.

We're decreasing the amount invested because experience showed $150k was too much. It's good for startups to get some amount of investment automatically; it lets them continue working on ideas that still look like ugly ducklings on Demo Day. But $150k was more than the successful startups needed, and it sometimes caused messy disputes in the unsuccessful ones. Switching from $150k to $80k may not completely eliminate such problems, but it will make them at most half as bad.

We're still not sure what the optimal amount is, but $80k is probably close. That should give founders roughly a year (depending on the number of founders and their living expenses) to test whether a risky idea will pan out.

While we're asking VCs for less money, we're asking for more time. Last batch we tried a new experiment where we invited partners from some of the top funds to hold office hours at YC. It worked well, so this batch we're combining office hours with the investments.

We're partnering with 4 investors who are each going to invest $20k per startup: Yuri Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital.




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