Assuming the companies seed round prices above $3m, it's an additional 4% dilution to the company (bringing total initial dilution to about 9%)
[0] http://www.readwriteweb.com/archives/techstars_nearly_matche...
The stronger the company, the less likely they are to accept the note at a 3mm cap.
I founded a startup to build a big scaleable business. If I end up selling, then it will only be a success if the acquiring team, the impact to our vision, and the economics are all excellent.
If I wanted to compare the incubators, I'd want to see relative user bases, revenue generated, valuations, etc. The proof is in the pudding, and that's the pudding.
Do people no longer feel that "the amount a graduate student makes for three months" is enough to actually start a company? Or is this more reflective of the market value rising for the amount of equity typically taken by a top incubator? If it's the latter, wouldn't there be a new opportunity for an incubator to give grad student wages to willing companies for a much smaller equity stake?
Yay capitalism, by the way.
TechStars and YC are certainly different but having read:
What Happens At Y Combinator: http://ycombinator.com/atyc.html
and the TechStars equivalent:
Do More Faster: http://www.domorefasterbook.com/
YC doesn't seem like any more of a black box than they are.
Neither is particularly "right" or "wrong", they're just different models.
These terms are significantly below the mean for the last YC batch, and I'd bet that some of the best startups don't take the deal. It's a decidedly less clear strategy to invest in only the not-so-good startups in a batch.
Because of the Yuri/Conway offer, YC had been a substantially more financially viable program for a lot of startups that need capital to get moving- This helps level the playing field.
While I love YC, competition in this space is good for everyone.
That said, it's still awesome to see expansion in funds available for early-stage companies.
HN link (submitted by me): http://news.ycombinator.com/item?id=3021939 video: http://www.bloomberg.com/tv/shows/techstars/
