1. You have idea, a plan to validate it and a plan to execute upon different outcomes and different startups require different financing. I am just wondering if YC has clear matrices which shows there is a same optimum financing for early stage startups in all the domains (healthcare, edu, consumer web, etc.) I am just curious about this!!!
But then I read the following: " 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."
2. The entire funding decision and amount is changed based on negative thought of a dispute among the founders. I believe this is fundamentally wrong and is against the entrepreneurial spirit. I wouldn't feel good as a person and an entrepreneur if my investor would come up with this. It basically means you don't know what you are doing and I am going to protect you against yourself!!!
3. Although a 70K difference is a small number, but it will have a huge impact on your startup:
- validating your idea and pivoting: the startups will show a tenancy towards low hanging fruit instead of seeking for the bigger picture solution
- Shorter runway impacts your flexibility and thus deal negotiations for the next rounds considering a 3-6 months funding period.
- Am just wondering how this will impact valuations of companies in post YC. I would think the valuations would go down.
One of the most valuable things about YC is the pressure it puts on a startup: focus or perish, excellence or death. I've really seen this bring out the best in people, including myself. I think that reducing the "free" c-note from $150k to $80k will increase the pressure a little bit, that entrepreneurs will rise to the challenge, and that the overall outcomes will actually be better. Accountability closes the feedback loop and results in faster learning.
As for (2), potential investors say a lot of things that just make you feel terrible. The best response is to dig into them and try to figure out if there is any truth in the criticism, make any adjustments you can, and keep pushing ahead.
There is no doubt about the track of record YC has built over the years. I believe that reasoning behind it as I read it sounds not compelling from an entrepreneur's point of view (kind a putting it like we are going to protect you against yourself). From a business point of view I just don't know if there are any matrices supporting their decision. And that's why I don't want to judge since I don't have the background information.
I am just wondering how this move will impact the new type of companies (big picture vs. short gains) & investment climate in the valley:
1. future valuations
2. Early stage rounds
3. product-market fit discoveries & pivots
