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by ericvorheese 4301 days ago
This “signaling issue” is a huge problem, by the way—accelerators that do the Series As for their top 3 companies deeply wound all the rest. - Sam Altman

How is this different from a VC firm like Andreessen doing Series As for their top 3 seed companies? Isn't signaling part-and-parcel of the startup economy? Why should YC be worried about signaling when a firm like Andreessen isn't?
2 comments
ig1 4301 days ago
It is an issue. It's even worse for big VCs because they have the funds to do the follow-on for any seed company they think is doing well. So it's not just a signal of being "top 3" it's a signal of being good.

[There are other reasons why VCs chose not to do follow-on, such a conflicts-of-interest, disagreements on valuation, etc. but any other VC you speak to will ask you why your seed investor isn't following-on]

Founders will often take money from seed-only funds or will take money from several multi-stage funds in order to mitigate the signalling risk.

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outericky 4301 days ago
Because YC is involved with a startup for 3 months far more intimately in a very early and telling stage. a16z, with all it's due diligence, won't know a startup as well as YC does at that stage.
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