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Comment by bko | Hacker News Reader

I was surprised by this:

> 10% had more than $50k of monthly revenue when accepted

If I had started a company that was bringing in 50k a month (600k a year), I would feel weird about being part of a group where 29% of the cohort is there on just an idea. Especially considering everyone gets the same deal. Surely 50k in monthly revenue is a better signal than someone that just has an idea and worked at some company before. I may be over stating its significance. Maybe those companies are movie pass business models, selling $10 bills for $5 so the revenue doesn't really mean anything

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Seems like YC has simply become a credential for future fund-raising, like "Harvard" or something else on your resume. No sour grapes at all, full credit to pg, Jessica, and the rest for building it to be wildly successful like that, but yes founders should think hard about why they would do something like YC and if the trade-off is worth it.

While "YCXX" has always seemed like an interesting signal especially around these parts, personally my own radar is that anything post YC15 is less likely to grab my attention, because the original YC founders were less/no longer involved. Nothing wrong with the new generation of folks running it, but having followed this space since their early days, there is still a certain cachet that comes with the "OG" batches of YC, which were small and seemed more impactful, compared to the later ones.

In many places outside Silicon Valley, you'll find that local investors are reluctant to deviate from 1x revenue or 10x EBITDA for "venture investing" valuations -- which are really more akin to mature company / PE-style worldviews. For companies working in those environments, you could easily justify YCombinator as a conduit to Silicon Valley investor networks with loftier valuations & hypergrowth mindsets.

Certainly makes sense - though the piper needs to be paid eventually though - loftier valuations eventually need to be justified, else companies eventually suffer a down-round or worse, founders get kicked out or the entire company gets shut down. Seems like a Russian-Roulette way of playing business - hope you can exit with strong wealth before you find the chamber with the bullet in it.

Yes, it's a different risk profile that doesn't suit all businesses. VCs are in the business of power-law returns: They're looking for homeruns, not base hits. It's really important for founders to select the right sources of capital for their business. The good news: YC itself is a pretty good actor on that front -- the new $500k uncapped SAFE helps founders retain optionality without fully committing them to hypergrowth trajectories.

what confuses me is why would you take on higher cost of capital when debt is nearly free?

with 50k/month in revenues, you could easily get a loan from several banks near 0.25~2% interest.

not sure exactly how much leverage you can get but at the extreme end you might get 6:1

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