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by tomnipotent 2843 days ago
YC minimizes risk by spreading money across as many startups as possible using research and and gut instincts to find good deals.

Index funds minimize risk by distributing funds across stocks in an index using research and gut instincts to find good deals.

YC is different only in that it has a more direct impact on the performance of its portfolio through active participation and the ability to influence its management. Both are still similar forms of capital management with different degrees of freedom.
1 comments
2arrs2ells 2843 days ago
YC is much closer to an index fund than typical VC (or even other accelerators - due to YC's much larger scale), but there's a big difference as index funds don't use any "gut instincts" - the criteria for a stock to be included in an index are fixed rules.

A better (though less succinct) analogy for YC in the public markets would be an "actively managed mutual fund investing in a broad range of early stage companies with a long-term time horizon."

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tomnipotent 2842 days ago
> as index funds don't use any "gut instincts"

Of course fund managers rely on this when relying on computer-assissted recommendations when deciding how much of each stock to buy. If you don't think someone opinion & gut instinct is involved, you're going to be disappointed.

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erubin 2843 days ago
with the technical exception of a new breed of `index funds' that happen to follow their own proprietary indices!
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