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by jparker165 3791 days ago
Right. All equity sold until this triggers takes a haircut.

This is especially weird if the 1.5% is taken post-money: companies will want to trigger the conversion as soon as they can reach the $100M valuation (or IPO in Canada even sooner).
1 comments
tomblomfield 3791 days ago
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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wasd 3791 days ago
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.
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mikekchar 3791 days ago
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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