[jack6e]

They state that the cumulative valuation of these 100 companies is $100+ billion, of which $81+ billion comes from the top 5 companies, and $95+ billion comes from the top 10.

Also interesting that the top 2 (Airbnb and Stripe) were in the 2009 cohorts. From the depths of the recession to $50+ billion combined valuation.

[anoncoward111]

Yeah these statistics should give any armchair VC/angel wannabees some thought:

Out of the 2000 or so startups that deserve some type of funding[1], the chance that you will pick a $1B unicorn is about 0.2%.

Additionally, the chance that you will choose the next Airbnb or Stripe is closer to 0.002%.

For comparison, you could turn $150,000 into $4,500,000 with about a 3% chance if you find a vegas table willing to service this bet size (which they have done in the past).

[1]a16z said this recently

[tlb]

I don't see how you get those numbers.

From the article, 19 / 1900 YC startups are above $1B, or 1% (not 0.2%). Many of the 1900 are young, so the fraction of any cohort that will eventually reach $1B is more than that.

The chance of having picked exactly AirBnB or Stripe from among YC startups is 2/1900, or 0.11% (not 0.002%). More companies out of that 1900 are likely to achieve similar valuations in the future.

The payoff ratio for angel investing is much higher than the 30:1 that Roulette pays. On the order of 1000:1 is typical ($10M cap safe - $20B IPO with 50% dilution on the way.)

[anoncoward111]

No worries, we're using different numbers.

A16Z said that there are 2000 startups worth funding every year. Side note, A16Z only talks to about 1000 of them due to focus areas and competitive overlap.

Based on the 19 unicorns that YC has unearthed over the past decade, we can really only say that roughly 2 unicorns are born every year, and 2 megaunicorns born every 5 or so years.

They payoff is immense for finding one, but the chance that you keep at least all 150k is probably worse than your roulette odds, not to mention time invested and emotional capital.

[ppezaris]

What am I missing? You seem to be taking the YC-specific unicorn numbers and dividing them by the much broader A16Z "fundable" numbers. Apples & oranges, no?

[anoncoward111]

I assert that they aren't apples and oranges becauss YC has picked every single unicorn there is to pick up until very recently. Therefore, both the 2,000 number from A16Z and 19 number from YC can be directly compared.

Do you think it is significantly easier to pick unicorns than I am describing? Because it seems very, very hard.

So hard, in fact, that YC has to pick 150 or so per year and hope that one or two hit 1000x to make up for the others.

[tlb]

I wish YC could have funded every unicorn! In reality there are a few hundred such companies worldwide, so it's less than 1 in 10.

https://www.cbinsights.com/research-unicorn-companies has a list.

[vasilipupkin]

I've done quite a bit of angel investing and have a pretty good IRR. The key is to make sure you stay within your area of competence or within area of competence of those you trust.

Also, the numbers will necessarily look worse for a fund or accelerator like Y Combinator than for an individual angel. Y Combinator has to fund cohorts of companies, right? they can't just say one year, nope, I found nothing I want to invest in this year. But as an individual angel you can.