Founders each get $150,000
Y Combinator founders receive $150,000 each via Milner and Conway’s Start Fund. The investment will be convertible debt, which converts into equity in later rounds, with no cap and discount, the most entrepreneur-friendly terms.
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Angelgate blog post
Arrington posts about a meeting of angel investors at Bin 38 in San Francisco, who account for ‘nearly 100 percent of early stage start-up deals in Silicon Valley‘. He doesn’t identify the people at the meeting, but says sources give him information on what the meeting is about:
- Complaints about Y Combinator’s growing power, and how to counteract competitiveness in Y Combinator deals
- Complaints about rising deal valuations and they can act as a group to reduce those valuations
- How the group can act together to keep traditional venture capitalists out of deals entirely
- How the group can act together to keep out new angel investors invading the market and driving up valuations.
- More mundane things, like agreeing as a group not to accept convertible notes in deals (an entrepreneur-friendly type of deal).
- One source has also said that there is a wiki of some sort that the group has that explicitly talks about how the group should act as one to keep deal valuations down.
He says the meeting raises serious concerns:
Collusion and price fixing, that’s what. It is absolutely unlawful for competitors to act together to keep other competitors out of the market, or to discuss ways to keep prices under control. And that appears to be exactly what this group is doing. This isn’t minor league stuff. We’re talking about federal crimes and civil prosecutions if in fact that’s what they’re doing.
Reached out to Conway
Livingston says Y Combinator reached out to Conway in its early stages, but wasn’t able to communicate to him what the firm did.
He said, “Is this in Boston? I stick mainly local.” I replied, “No, we’re in Mountain View and we’d love for you to come to Demo Day.” He said, “Is this a chance to invest in the incubator?” I replied, “No, we don’t want you to invest in us. It’s a chance to invest in the individual startups.” Then he told us he’d circle back, since he was jammed. We got the “am jammed now” from Ronco—it was so embarrassing.
She says Conway did end up coming to Demo Day in 2006, and returned to talk at the next year’s winter event.
Loopt joins Y Combinator
Loopt joins the inaugural batch and receives a reported $6,000. Altman says the money-saving culture at Y Combinator, which extends to things like readymade meals, helps develop the location-based mobile app company develop:
That culture of frugality and discipline is really important for the Y Combinator mindset. The start-ups that do well are the ones that are working all the time.