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Comment by il | Hacker News Reader

It's pretty incredible to think that YC is likely the highest performing venture fund in history.

For 380 companies that works out to about $7.6 million invested into a portfolio of companies worth $7.78 billion. Assuming a 2-7% stake for YC(after dilution), that puts the value of YC's share at $155-$545 million on that $7 million invested.

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There are a couple of catches though. One is that we can't invest more at such rates of return. A VC fund may get a lower return per dollar, but they can invest a hundred times as many dollars at that rate. The other catch is that the $7 million doesn't include our operating expenses or the value of our time.

You could take a larger initial stake. I assume that the value placed on the YC program, including the cash, mentors, exposure, network etc has probably risen over time.

I think it's mainly because of Paul Graham. He's a visionary and he's excellent at spotting awesome teams (even if their ideas suck). Nobody would have thought twice about Airbnb, but Paul saw something that other investors didn't see. He noticed how effectively the team worked together. He also knew they would pivot if they needed to. Having that type of discernment has allowed YC to find & fund all these amazing startups. His hunch with the Airbnb guys paid off considering the company is valued at over a billion now!

Don't underestimate being the dominant startup accelerator. While probably well deserved, it's also kind of a "self-fulfilling prophecy".

~20x isn't close in the pantheon of record venture deals, especially when normalized to an IRR (annual return).

Benchmark Capital is often cited since their $6M investment was worth 500M+ at IPO less than a year later and then eventually ballooned to being worth $5B as shit got crazy.

the 12.7M Accel invested into Facebook in the A was worth ~$10B at IPO. I think even that is less on IRR than the ebay deal

True, but probably >200 of those companies are still active, and its only been 7 years. Would you bet that that 20X return so far is going lower?

You can't compare the entire fund to returns on a single deal. The investment in dropbox, conservatively assuming a 20k investment with dilution to 1% and sticking to the $4B valuation, is already a 2000x return. The actual return will probably be much higher, as DropBox's value will continue increasing.

Right, but those are single deals. You could show similarly silly numbers for YC/Heroku, etc... How did Benchmark and Accel do in aggregate is the question? I don't think that data is public, is it?

Jeez, nik, the person wrote "venture _fund_" and you're comparing to individual deals?

More here - http://news.ycombinator.com/item?id=2854630

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