[webwright]

"I don't think it's a barometer by which start-ups are judged."

I disagree-- it's a great barometer for startups at this stage (though certainly not the ONLY one). It's certainly strongly correlative to liquidity (take 100 companies that had a meaningful-for-angel/seed-investor exit and count the ones that took ZERO investment beyond that).

Or, closer to home... Look at the YC startups that are likely make YC a significant return. How many of them took no additional funding?

Or, if you really want to ignore liquidity/return for the investors... Look at the YC companies that experienced the most growth. How many of them took no additional funding?

[petenixey]

You've got to decide whose return you want to measure - the investor or the entrepreneurs'.

Look at the most profitable YC startups (Weebly, Wufoo (others?)) and one took no further money, one took angel. I can only think of two of the ones who raised big money which are making revenues of the same order that I believe Wufoo is generating and certainly their profits are a fraction thereof.

Startups in the Valley are well optimised for Venture Capital but that's not the same thing as optimising for revenue or profitability.

[webwright]

Yaw, that's totally true. This is from the TechStars blog-- the only metric they ultimately care about is return on investment. So this is a big win for them. A huge exit/IPO just about NEVER fails to have a Series A. Given MY tolerance for risk, I'm probably prefer to own Weebly or Wufoo before most other YC companies... But I think it's unlikely that they'll be a HUGE win for YC (9-figure exit, that is).

Entrepreneurs generally (maybe just sometimes?) get into the startup world in the hope that they'll see a multi-million dollar exit (to compensate for the risk and the lack of salary for a chunk of time). For people motivated that way, the Series A is a big deal. Wade through data of $5m+ exits and I think we'd find that the non-funded startup is pretty scarce. Wad through the $20m+ exists and I think they'd be functionally non-existent.

Weebly took $650k according to CrunchBase, so they'd fall into the 6 out of 10 TechStars group, FWIW.