Hacker News new | ask | show | jobs
by betterlabs 5358 days ago
This is awesome for YC / YC startups as well as AH as they get to be in the YC companies at the very early stage. However, I am not able to understand why VC firms would go so broad and fund such a large number of startups with amounts that are insignificant for their fund sizes. Would it not be distracting? Would it not leave them with too broad a portfolio to be able to truly make significant contributions to the company's success? Does it not feel like a spray and pray approach? I totally understand this from a deal flow perspective but I'd love for VC firms to focus on deals they believe in and focus on building massive game changing businesses. And for this, I am sure they have to invest in 10 to find 1 that works, but investing in 200 feels not so right - and lacking conviction.
2 comments
pg 5358 days ago
Almost all VC funds do seed-sized investments now. Both sides understand it's not the same as a series A, and both are ok with that.

Incidentally, Ron Conway is proof the model works. He has been operating this way for decades and founders are as a rule pretty happy with the amount of help he gives them.

link
betterlabs 5358 days ago
I am not sure if VC firms doing seed investing have done it in such large numbers and if not (which I think is the case), are they setup to manage 100 startups a year versus 15.

Also I am wondering if this approach will have to be the new approach or the one that Khosla, Benchmark, Sequoia (I understand they are indirectly in YC companies) and similar ones have had for long, of identifying big trends, finding the right company and going big behind it, is still better. I have seen the latter fail as well as succeed. I think we have very little data on the former but there is bound to be a limited set of companies that a VC partnership can optimally support / manage and this new approach may put a strain on it. I guess we have to wait and see. Thanks much for replying, pg.

link
wavephorm 5358 days ago
They are buying 60 lotto tickets for $50,000 each, because it's cheaper than the opportunity cost of missing out on the next big one.

I wonder if $50,000 even gets you an in-person meeting.

link