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Comment by austenallred | Hacker News Reader

It's crazy that this is even an issue. Investors fighting over YC companies to the extent that YC has to play politics to make sure everyone is getting a fair shot; that's pretty insane.

The accelerator I participated in had relatively open doors and investors who came to everything from office hours to pitch practice. We ended up taking money from one of the most involved investors first, (and left some who really wanted to participate out) but the group of investors who didn't get in on the deal said, "Well it's fair if they want to put that much time and effort into it; we're not willing to do that."

It is, however, a major signal; if the guys who know you intimately well don't want to invest, could cause other investors to be cautious/skeptical, which isn't fair to the companies that don't get an investment from the YC partners.

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    Investors fighting over YC companies

My impression was that it was less to do with fighting and more to do with YC companies not being able to raise funding because a YC partner hadn't invested in them.

For a while there was a standing offer from Yuri Milner to invest a substantial amount as a convertible note in any YC company (this has changed in the meantime, but it gives you an idea about how hot YC companies are).

That was the basis for YCVC.

> It's crazy that this is even an issue.

Agreed.

"Investors fighting over YC companies" also shows that there is insufficient high-quality deal flow (real or perceived). Stated another way, there is a supply/demand imbalance for high-quality deal flow. While hard to tap, there's an opportunity for creating/finding/aggregating high-quality startups.

Obviously, replicating YC has been tried, so a real solution likely requires some innovative approach that I can't currently think of. But, if I'd bet on a company that creates a solution because there is clearly high demand from willing and able buyers.

It's much simpler than that. YC is a stamp-of-approval, and there is a very large amount of money available for pre-vetted deals because this substantially improves the chances VCs have for a return on their investment.

So the YC advantage is what creates this scarcity, and that's rapidly starting to exhibit network effects and this is one of those.

The 'classes' model is a stroke of genius, it reduces the question of whether or not an investment is a good one to is this investment a good one against the backdrop of a whole pile of possible investments. That question in isolation is much harder to answer than the question with a lot of material around it to compare against.

Good points.

> there is a very large amount of money available for pre-vetted deals

This is part of the point I was making. Which is that there is an obvious opportunity for a company to come along and commercialize this demand. I'm not saying it's easy, just that it would be lucrative. More specifically, the demand volume far exceeds the amount of supply that YC or any single organization can produce. YC is benefiting from the demand b/c they produce a high quality product (pre-vetted startups). However, the demand would exist with or without YC...just that without YC the supply/demand imbalance would be worse.

If YC could double its output while maintaining quality, or if a 2nd organization/company comes along and creates high-quality, pre-vetted startup supply then they too will enjoy high demand.

You're missing one crucial bit I think. The vetting is the hard part. And YC has that down to an art form, they've crunched the numbers on thousands of applications, have built up a large network of alumni who are very smart individually and scary smart collectively.

This is one very tough act to follow. Not that that should stop you from trying.

One wonders...what makes a "high-quality" deal?

I suspect the problem is more that VCs are neglecting the first half of their job description.

No, they are just trying to maximize their return. They still carry plenty of risk but the ratio changes in their favour if they use YC as a vetting machine. And with a couple of out-of-the-ballpark hits under its belt YC is now a proven kingmaker.

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