It’s no secret that Silicon Valley is teeming with wealthy tech veterans, many of whom are eager to try their hand at angel funding a few new startups. Unfortunately, the vast majority of them are put off by the logistics of figuring out exactly what they’re supposed to do (handing out money isn’t as easy as it sounds). In light of this, Paul Graham and the team at Y Combinator are putting on a special event, dubbed AngelConf, that will bring together some of the Valley’s most prominent investors to tell these prospective Angels how it’s done – and hopefully help give a new wave of startups a chance to make it big. The event will be held on March 5th at Y Combinator’s office in Mountain View and will be free of charge, though you’ll need to request an invitation from its homepage.
Graham believes that there are probably 100 times as many would-be angels who haven’t actually gotten around to investing as there are actual ones. He should know – he spent seven years after selling Viaweb before he started his Y Combinator incubator. And during the time since founding Y Combinator he’s also found that the number of startups emerging is directly related to the amount of angel funding available. Even a modest boost in the number of angel investors could be a boon to the startup community, especially in light of the economy.
From the event’s homepage:
Have you thought about investing in startups, but didn’t know how? You’re not alone. Investing in startups seems mysterious and difficult. How much are you supposed to invest? What legal agreements do you need? Where do you find startups to invest in? How do you pick winners?
AngelConf was designed to answer these questions. Silicon Valley’s most prominent angels have generously agreed to spend an afternoon explaining the secrets of angel investing, from mundane matters like deal terms to questions we all still wonder about, like how to tell which startups will succeed.
Here’s the roster for the event, which includes our own Michael Arrington:
Paul Buchheit
Jeff Clavier
Ron Conway
Paul Graham
Dave McClure
Mike Maples
Ariel Poler
Aydin Senkut
Jim Young
Andrea Zurek
Michael Arrington
Alluring concept of investing into small names for big ideas.
Y Combinator are making right choises one after another…
YCombinator is a running joke.
The punch line: When they decide to invest in the Huckleberry who wants their help, they provide $10 grand in exchange for 45% of the company.
YCominator just closed its office in Cambridge. They are running for their uninspiring lives…
Stay clear of these predators.
There’s freedom of speech on the web.
That’s all I’ll say
I have been a big fan of Paul Grahan and Y Combinator for a long time.
Congratulations on all of their success so far and their ability to be entrepreneur friendly in an otherwise hostile world.
Anjali Sen
dfsff
dgftgytry
do you have to be an investor to attend, what if i just want to go there to pull a madoff?
Graham is 1980s relevant. He married his babysitter and hit the road when the boys back East realized he was yesterday’s news.
This guy is a hairpiece looking for action. Do this loser a favor.
Don’t give him any.
Why you hatin’ on MC?
nice article…
I love the concept from Y Combinator.
I wonder if this is in response to recent talk of angels leaving the tech space … http://reiboldt.com/?p=568
This is a great time for Series A and Angel rounds, we’re actually doing extended Series A rounds since B+C money is so hard to come by these days.
Sounds like a new generation of convertible-accepting chumps are required!
Paul Grahan and Y Combinator what an interesting concept.
They’ve done nothing. Their record is below average. They offer little and ask for the world.
Think of these guys as the “Rich Real Estate Investors” who want to show you their system and how its done–all for this simple payment of…
YCombinator is an expose story waiting in the wings. But don’t look for any investigative stories coming out of TC. Mike is one of the boys.
Sad.
What are you talking about? They put small amounts of money in solid entrepreneurs without taking too much equity, and they realised that the old VC model of several millions of dollars for preferred shares that disadvantages entrepreneurs no longer makes sense in a world of free software and declining hardware prices.
What have you achieved in the meantime? Except slandering others whie hiding behind pseudonyms?
Anjali Sen
agreed. ripping on Paul Graham behind an anonymous handle… what are you hiding from?
if you’re a big VC or awesome angel, show us your IRR & innovative companies. if you’re a hotshot entrepreneur, say why you think his process sucks.
criticism is fine, but don’t hide behind a skirt while you do so.
You know what I’m not doing at this very moment?
Trying to get a half-baked idea like “Smart Babes Are Sexy” funded.
Do you know why I’m not trying to get an idiot idea like that funded?
Because it is, perhaps, the most banal, simplistic, subjective, superficial piece of nonesense I’ve seen all week.
Unless a VC firm is run by retards wearing crash helmets strapped to their Jungle gyms—you will never receive a dime for your lame brained concept.
BTW: I don’t know if you’re sexy. But hell, you certainly aint smart.
Great idea! Seed funding is difficult, any forum that can educate the entreprenuer or the investor immensely increases market efficiency.
Good job TC.
I really hope they video this and make it available.
The goal of YC seems to be very noble. Way to go.
Any idea if they provide online video telecast of the event? Just asking as you seem to be more connected!
Tried at AngelConf website, but seems there is none.
Idiots:
1. Graham isn’t reading this. Get off your knees.
2. YCombinator provides NOTHING of real value, which is why they are advertising at this very moment.
3. None of you know anything about VCs. Please stick your collective heads in a bucket. Ask for a kick in the ass.
4. Rinse. Repeat.
This is a GREAT AMAZING WOW idea. My dad is an Angel and his biggest concern is that the due diligence is getting so restrictive now and people dont know what to invest in. There is so much money out there that people are willing to invest but just dont know how! This is a BIG problem.
With the way that economy is, it is getting more and more uncommon for a big VC group to give you millions after destroying your evaluation as much as they can.
Angels are the new VC in our current situation. We need more people out there willing to give smaller amounts of money collectively and sharing their knowledge and know how as best they can.
SMART money is what we need, you cant just throw money at the problem!
Spare me.
None of you–and I mean NONE of you–have any idea about the workings of YCombinator. Praising them without knowing the pitfalls will not–repeat–NOT–get you funding.
Ask yourself this simple question: What does investing in YCombinator get you? $10K, $15K?
If you can’t raise that amount of money yourself, go back to working for someone else. You are not ready.
Graham’s latest golden boy startup is heading for disaster. It’s a joke for those of us in the know.
So quit suckling on the teat that was Paul Graham’s 1980s success. It means nothing to anyone these days.
Trust me.
I know about the inner workings of Y Combinator. The process is immensely valuable. Sounds like you have an axe to grind… mind sharing why?
My so called “ax” is information. I collect it, analyse it, and conclude from it.
You should try it sometime.
education is good, especially making more business process transparent and open, which I think leads to growth for everyone involved. I’m surprised with the anger, illogical and irrelevant attacks made here!!
1. Watch Oliver Twist. Study Fagan
2. Poorly Design Website Claiming You are Success
3. Sit Back and Watch Morons With Bad Ideas Appear in Droves
4. Siphon Through Half-Baked Ideas, Bong-Induced Business Plans, and Crayon Scribble from Mentally Ill College Kids.
5. Find the ONE idea that has potential.
6. Invite Socially Undeveloped Nerd Owner For Beer and Pizza.
7. Offer him $5,000 and all the Beef Jerky He Can Carry in Exchange for 51% ownership.
8. Leak Story to Techcrunch. Decline to Comment on the Record.
9. E-mail Satan. Sell Him YCombinator Business Model.
The Venture Risk Investing industry is divided into 3 distinct groups: (1) Seed/Startup; (2) Traditional VC and (3) Exit
They are systemically, operationally and attitudinally different. They have different metrics for acceptance and success; funding, oversight, sourcing, profitability and, most importantly, infrastructure.
What is needed is a Public-Private For Profit dedicated effort to work with, support and compensate the Seed Infrastructure (Incubators, Economic Development Agencies, Tech Transfers). This infrastructure already exists and provides the efficient sourcing, screening and post-investment oversight needed to develop Series A worthy companies. What is needed is a dedicated effort that is not geographically constrained. What is needed is a thorough Virtual Incubation system that brings both Community and Collaboration to all elements of the total Investing community (Corporate/Government partners for “Validation”; Entrepreneurs & the VC/Corp Dev Community for follow on funding after the Seed/Startup stage).
What is needed is the Growth of companies and good jobs.
The Venture Capital stage of the Venture Risk Investing industry has a valuable place – to expand Seed/Startup companies with money, targeted managerial talent and business development/partnership assistance.
By dedicating a private/public collaboration to increasing the value and viability of early stage companies you are also increasing their valuation for their Series A round; thereby leveling the playing field with what will be a smaller group of Traditional VC funds.
This Seed dedicated effort can take two forms:
(1) Standalone Fund
(2) Operating Division of a Traditional VC Firm
Please review the powerpoint – The START Fund -
http://www.slid...rt-fund-feb2009
I look forward to all comments.
Thank you,
Elliott Dahan
Elliott@thegrowthgroup.com
YCombinator is a waste of time. The kids going to them have no clue about fundraising and are getting fucked.
I’ve reviewed their deal docs.
You can’t even hire a lawyer to review the legals for the measly amounts of money they dish out ($20k), and you suddenly get burdened with the telephone directory of restrictions of VC deal would bring.
They then say ‘we will take care of the legals for you’.. which completely fucks over clueless investee companies.
Furthermore you set yourself up for an arse raping next time you raise money – as any real investor would realise a) you’re clueless and b) if you can get these sorts of deal terms for 20k well you should be able to get a hell of a lot more for any reasonable amount of financing.
The noobs that go to these sorts of groups have stars in their eyes thinking looking at all the k-rad funky digs these guys have.
This is incubator 2.0 of the worst kind.. incubators flamed out in the dot com boom because they incubated companies to death like an overcooked egg.
You are better off getting the 20k of family and friends in 100% vanilla common stock if that’s all you need.
YCombinator’s business model seems to be the oldest of VC traps–but its inverted because the money up front is so small, and the money comes with inplied influence to get you where you need to go.
Obtaining VC funding isn’t a good idea these days because it simply burdens the owners with added responsibilities and unwanted influence.
I would think a better idea is to develop a product that generates revenue, fund that product independently, and bring the product to market via deals with customers and distribution networks.
You don’t need VC money for that, believe it or not.
The days are gone when cool novelty products get funded. As they should be.
Develop a product that helps people or businesses and you will see the revenues come to you.
Crazy, huh?
Um. Y Combinators’ investments are common stock. Try checking your facts before you start going off on things you know nothing about.
Try checking your facts.
They take “common stock” alright (7% or so.. for free) as well as a convertible note into the next rounds pref stock ($20k), plus a number of contractual rights and privileges to mask a pref stock deal as “common” including veto rights, vetos over selling stock, vetos over ESOP, thus vetos over hiring of pretty much all staff, rights to increase their shareholdings should founders do so, lockup terms, etc etc etc.
Its a pref stock deal. They just call it “common”
How many of you are actually web hacker types? If you don’t fit the mold for Y Combinator then of course it doesn’t make sense for you (it’s not supposed to). In either case, if you’ve founded a successful startup and gone through an institutional investment round please say so.
But the fact of the matter is that every year Y Comb gets hundreds of applications from kids who are often not only technically gifted but also business and financially-savvy. Sure if you’ve got a product with tons of customers and solid revenue streams, you don’t need Y Combinator. Yet it’s clearly not so easy to do in practice.
Here’s why I like Y Combinator:
1) $5k + $5n @ 10-15% is not bad. Say you’ve got 3 founders so you get $20k and let’s say at 10%. That’s a $200K pre which is not bad for just an idea.
2) The money they give you is, at the end of the day, irrelevant. It’s INTENTIONALLY barely enough to cover your expenses for 10 weeks during the program. What’s more important is the focus and strong network of fellow hackers and also the lighter weight equivalent to Operational Partners you might have from a VC. This is made even more clear by the fact that a number of Y Combinator startups have been founded by young adults 24-26 years old who came from relatively well-paying jobs and could have easily used $15k of their own money to do a startup.
3) The difference at the end of the day is that Y Combinator targets kids with ideas and the skills to launch who otherwise might not be able to start a startup. Because of its selectiveness (<1%) getting into the program is an extra impetus to really go 100% on your startup and get it off the ground. Y Combinator gets you off the ground period. You’re at a stage where you aren’t haggling over valuations.
Of course you may not agree with this perspective but there are plenty of smart people who do and will apply to Y Combinator this year, as any other. Here’s a snippet of Graham’s VC philosophy:
http://www.paul.../vcsqueeze.html
Oh I forgot to mention…
What VC will fund (and also provide operational help) just an idea? I think today getting money with just a PPT is especially hard, if at all possible
>any real investor would realise a) you’re clueless and b) if you can get these sorts of deal terms for 20k well you should be able to get a hell of a lot more for any reasonable amount of financing.
are you implying that Sequoia, Redpoint, Khosla, First Round, Union Square, NEA, etc who have all invested in YC companies such as (Dropbox, Scribd, Xobni, Loopt, DISQUS, Heroku) don’t count as real investors?
What would be interesting is to see whether YCombinator has a “finder’s fee” that isn’t disclosed to the startup because it occurs out of their sight and may affect the development or lack thereof, of a company.
YCombinator? Do you engage in such tactics? If so, do you disclose them to young entrepreneurs?
On what terms?
I bet the founders of those companies are stitched up well an truly
Love to see Ycombinator’s internal business model.
Ten bucks says I’m right.
Wow. I really do not understand the animosity towards Paul Graham and YCombinator. If you don’t think that YCombinator is a good deal, then don’t participate. But if you ask the entrepreneurs who have been a part of the YCombinator program what they think of it, they have nothing but praise for Paul and what he brings them. It is not just the money. It is the mentorship and advice which is, frankly, invaluable.
As for AngelConf, it was equally compelling and valuable. I can’t think of another time in which so many smart angel investors have been gathered to share their perspectives on investing. It was a fantastically valuable event for everyone who participated. Well worth watching the video.