Hacker News Reader

I believe this is related to follow-on investments from YC after the initial investment

But that does not matter - YC will always be assumed to know something extra than other investors. They will have seen something at the weekly dinner, whatever.

So YC's decisions will impact meaningfully on the ability to raise subsequent rounds.

That probably was true for series B anyway, but now its true at the priced seed round.

I get it - its silly to throw gobs of money at companies that will fold next week, especially if you know they will. But ...

It does matter because you misunderstood (like your first sentence in your first comment said). Every company that gets into a YC batch is still invested in by YC. You cannot be in YC without being invested in by YC.

What's changing is the follow-on investments are not automatic. It used to be they would automatically exercise their right to maintain their 7% stake by investing more. Now they're going to maintain a smaller stake, and it's not going to be for every company. Only about 1/3rd of them.

Why would YC know more than other investors? The required knowledge seems to be a function of ability to predict market outcomes and perform due diligence.

Reply on news.ycombinator.com