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Yes - I was confused about this as well.

I would guess that YC's traditioanl initial 7% equity stake would typically be diluted to around 3-5% by the time a company sells or IPOs.

So 1.5% of sale/IPO is clearly less than that, but it still feels a bit weird.

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Given the number of companies exit at 100m vs exit 1-99m is huge. They're taking a bet at the earliest possible time and are only making money in the case of extreme success.

It's a 75:1 return on investment for those that make it to a 100M exit. They just need to make sure that they can pick better than 1 in 75 to break even. If they can get 1 in 25 they'll get a 300% ROI. If they can get an exit within 5-10 years, then that's very competitive against other investments.

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