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Comment by sama | Hacker News Reader

This will just be a small part of what we do. There are now 15 partners on the early stage side and 1 on the late stage side.

Two thoughts:

1) In the same way YC was able to make the early-stage ecosystem better for founders, we think we can do the same for the late-stage ecosystem.

2) It's important that we can support companies at later stages in areas that other investors don't like to support.

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It will be interesting to watch how it evolves, did you consider creating a new entity?

Having been through the process three times now (on the side of the startup, not the firm) its been interesting to evaluate the different focus and people who populate the later stage companies from the early stage companies. Clearly the questions and metrics are different, but I've found the engagement to be different too. Much more bankerish and less advisorish if that rings any bells at all.

I think YC changed the early stage game in a fundamental way, much better than Angels it has the whole network effect of both Angels and every company that has been through the program. I guess I'd like to challenge you to be more innovative as a late stage investor than announcement seemed to suggest.

How will you manage negative signaling?

i.e. YC leads a growth round for Company A, but not for Company B. Ergo, VCs think Company B isn't worth funding.

The main thing we're doing here is not making any discretionary bets on companies until they're far enough along to be valued off of an Excel model. At that stage, signaling matter much much less.

Is there a subtle conflict of interest with YC essentially benefiting from lower early round valuations, whereas before this was not the case, e.g. YC and startups were aligned on valuation

Makes sense. No reason why YC needs to recede over time and progressive funding rounds. Long tail early stage startups are the beachhead, this is the "big vision" -- vertically integrate the VC stack. Right now other VCs are benefiting from the value YC adds at the beginning of a company's life. YC's stake increases in value, but this lets YC keep betting on itself.

Good stuff.

Can you give an example of an area that late-stage investors don't support? Do you mean something like fusion research, which will obviously have payoffs >10-20 years down the line?

(Why don't current VCs invest in those areas, if they're potentially profitable? Just a lack of a long-term view / fund wind-down timelines?)

That is a good specific example :)

They don't because they have to give a return to PEs, I think most VCs have 5-6 year funding cycle.

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