6 ms·

Andreessen Horowitz Joins The Start Fund To Seed YC Companies

123 points by joetyson 15y ago

pg 15y ago
Like Ron and Yuri, Andreessen Horowitz are real pros. I think founders will like them.
- Shenglong 15y ago
  I know investors tend to stick with the companies they fund and help them out, but since $150k split three ways isn't all that much for each investor, how much commitment have you seen on the angels' part? I mean, even if a quarter of the YC companies take the offer, I imagine they'd have a lot of companies to deal with.
  - earbitscom 15y ago
    I had the same question when they made the investment. The SV Angel team and Felix from Start Fund have not hesitated once to help when asked, and we've had more than our share of proactive, unprompted introductions to key people from them.
  - pg 15y ago
    In the past they've paid about as much attention to the startups as they would have if they'd done a seed investment of the same size a la carte.
- wavephorm 15y ago
  I emailed a16z to ask for a meeting or phone interview about an "amazing" opportunity to invest "early" in a new startup. They did not respond or ask any questions, I was completely ignored. All their deals seem like big money and late stage. Do they know a good startup when they see it? Seems like instead of finding startup investment opportunities by themselves they're going to let YC filter out the good deals for them. They even said in the article it's just about deal flow.
  - pg 15y ago
    Don't you do the same thing when you get emails offering you amazing business opportunities? As a general rule, no VC firm will respond to a cold email. You need an intro from someone they know. Your best bet is to try to get an intro from someone at a company they've invested in.
    - wavephorm 15y ago
      They have a form right on their site for submitting business plans. http://a16z.com/about/contact-us/ http://a16z.com/about/contact-us/
      - pg 15y ago
        Even if a VC offered an email address to send business plans to, I'd try to get an intro instead. (Also, the instructions on the form say it is for "other inquiries." You're supposed to send business plans to one of the email addresses on the right. So if you used the form that may be why you didn't hear back.)
        wavephorm 15y ago
        Yes as I said I emailed them. I sent everything, my business plan, my site, everything. Now maybe they didn't like my application. Maybe it was no good. But from my perspective, the only interaction I have with this VC is being stonewalled by them after spending time applying and dropping (what I believe) to be a great oppurtunity right in their laps.
        webwright 15y ago
        VCs have a fund (basically a big finite amount of cash). They can make X investments with that cash. They also have a very finite # of hours they can invest to help their companies. The best ones (like these guys) are literally buried in highly qualified deal flow. That means entrepreneurs coming in with great references, working in great markets, often with traction. They have no shortage of deal flow. On the other side of the marketplace, there are literally zillions of entrepreneurs who want their money. All that said, it'd be nice if they had an auto-responder on the site saying, "We try to look over all of these, but can't offer a reply unless something REALLY catches our eye," to set expectations accordingly.
- Hitchhiker 15y ago
  As always, yC pulls off another caper. 150K split three ways between AH, RC and YM is akin to having 15M worth of cred. PG == the new patron saint of start-ups.
timerickson 15y ago
So, the deal stays at $150k correct? What incentive do Ron and Yuri have to give up 1/3rd of the Start Fund deals to Andreessen Horowitz? Forgive me if this is a naive question.
- Shenglong 15y ago
  Syndication diversifies and mitigates risk. You're adding a third pro to the mix, so you're more likely to have a proper solution to any given problem.
  - timerickson 15y ago
    Are Ron and Yuri then admitting worry about the outcome of these deals? If they see the need to mitigate risk to a 3rd party (to the extent of giving away 1/3rd of the potential outcome), it seems they may be unsure of the bets they placed with Start Fund. Help me understand the thinking here...
    - Shenglong 15y ago
      You don't need worry to start reducing risk. Any smart investor will lower risk as much as they can. If they're worried about their total investments, they would simply offer more (the same) investment as before. If they're lowering amount/group in favor of number of groups, it probably means it makes more financial feasibility to do so. Edit: Also realize that the initial investment also acts as a doorway for them to enter future larger deals, if they so wish. Shifting from a 75k investment to a 50k investment means they increase their opportunity without really sacrificing good will on the founders' part.
- staunch 15y ago
  1. AH could offer $50k on the same terms if they wanted, and most companies would probably take it. It's not like Yuri/Ron have any exclusivity arrangement. 2. YC classes have grown in size a lot. It's probably a bit more expensive than they planned, so they don't mind sharing the load. 3. Having AH as a partner helps the startups, which means they're more likely to succeed (hopefully).
bfe 15y ago
Interesting that both SVA and AH responded to the success of YC not by setting up separate programs to emulate it, but by coalescing around it. This clearly made sense for Milner as a relative newcomer but the other two groups had no shortage of connections and capabilities in place and could easily have taken either route. YC keeps increasing the margin by which it is the top program of its kind.
- joshu 15y ago
  A16z doesn't have the bandwidth to start one of these, I think.
- pbreit 15y ago
  "easily" Creating and running YC is not in the least bit easy.
  - bfe 15y ago
    Certainly not! Especially being the forerunners of their new model. I just meant that SVA and AH could, if anybody anywhere could, and if they so desired, have concentrated their resources to try to set up a new program that emulates YC. Compared to anyone else's chances, in the universe, to emulate YC, SVA or AH would have had the financial, intellectual, and social resources to have had a relatively easier go at it. But neither of them tried to emulate, they both chose instead to coalesce around and go to war with the YC they had. I think that choice is non-trivial, and significant; and it lends ever more acceleration to YC putting ever greater depth between itself and any potential competing program.
betterlabs 15y 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.
- pg 15y 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.
  - betterlabs 15y 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.
- wavephorm 15y 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.
nhangen 15y ago
This is great because it now means you not only get PG's advice (and the YC team), but that of Milner AND AH to boot. Makes me really excited about October 31.
knarf55 15y ago
This is really cool. Love the fact that they are trusting PG and team's filtering process and guidance to build great startups. This is super sweet for the founders as well since they will provide some awesome advice and guidance.
Kavan 15y ago
Congrats YC! Fills a gap too. Ron - Seed, AH - VC, Yuri/DST mezzanine. I am a little surprised that Ron and Yuri let them in on such a good deal. I am sure a lot of VCs would jump at this opportunity.

123 points by joetyson 15y ago

pg 15y ago

Like Ron and Yuri, Andreessen Horowitz are real pros. I think founders will like them.

Shenglong 15y ago
I know investors tend to stick with the companies they fund and help them out, but since $150k split three ways isn't all that much for each investor, how much commitment have you seen on the angels' part? I mean, even if a quarter of the YC companies take the offer, I imagine they'd have a lot of companies to deal with.
- earbitscom 15y ago
  I had the same question when they made the investment. The SV Angel team and Felix from Start Fund have not hesitated once to help when asked, and we've had more than our share of proactive, unprompted introductions to key people from them.
- pg 15y ago
  In the past they've paid about as much attention to the startups as they would have if they'd done a seed investment of the same size a la carte.
wavephorm 15y ago
I emailed a16z to ask for a meeting or phone interview about an "amazing" opportunity to invest "early" in a new startup. They did not respond or ask any questions, I was completely ignored. All their deals seem like big money and late stage. Do they know a good startup when they see it? Seems like instead of finding startup investment opportunities by themselves they're going to let YC filter out the good deals for them. They even said in the article it's just about deal flow.
- pg 15y ago
  Don't you do the same thing when you get emails offering you amazing business opportunities? As a general rule, no VC firm will respond to a cold email. You need an intro from someone they know. Your best bet is to try to get an intro from someone at a company they've invested in.
  - wavephorm 15y ago
    They have a form right on their site for submitting business plans. http://a16z.com/about/contact-us/ http://a16z.com/about/contact-us/
    - pg 15y ago
      Even if a VC offered an email address to send business plans to, I'd try to get an intro instead. (Also, the instructions on the form say it is for "other inquiries." You're supposed to send business plans to one of the email addresses on the right. So if you used the form that may be why you didn't hear back.)
      - wavephorm 15y ago
        Yes as I said I emailed them. I sent everything, my business plan, my site, everything. Now maybe they didn't like my application. Maybe it was no good. But from my perspective, the only interaction I have with this VC is being stonewalled by them after spending time applying and dropping (what I believe) to be a great oppurtunity right in their laps.
        webwright 15y ago
        VCs have a fund (basically a big finite amount of cash). They can make X investments with that cash. They also have a very finite # of hours they can invest to help their companies. The best ones (like these guys) are literally buried in highly qualified deal flow. That means entrepreneurs coming in with great references, working in great markets, often with traction. They have no shortage of deal flow. On the other side of the marketplace, there are literally zillions of entrepreneurs who want their money. All that said, it'd be nice if they had an auto-responder on the site saying, "We try to look over all of these, but can't offer a reply unless something REALLY catches our eye," to set expectations accordingly.
Hitchhiker 15y ago
As always, yC pulls off another caper. 150K split three ways between AH, RC and YM is akin to having 15M worth of cred. PG == the new patron saint of start-ups.

timerickson 15y ago

So, the deal stays at $150k correct? What incentive do Ron and Yuri have to give up 1/3rd of the Start Fund deals to Andreessen Horowitz? Forgive me if this is a naive question.

Shenglong 15y ago
Syndication diversifies and mitigates risk. You're adding a third pro to the mix, so you're more likely to have a proper solution to any given problem.
- timerickson 15y ago
  Are Ron and Yuri then admitting worry about the outcome of these deals? If they see the need to mitigate risk to a 3rd party (to the extent of giving away 1/3rd of the potential outcome), it seems they may be unsure of the bets they placed with Start Fund. Help me understand the thinking here...
  - Shenglong 15y ago
    You don't need worry to start reducing risk. Any smart investor will lower risk as much as they can. If they're worried about their total investments, they would simply offer more (the same) investment as before. If they're lowering amount/group in favor of number of groups, it probably means it makes more financial feasibility to do so. Edit: Also realize that the initial investment also acts as a doorway for them to enter future larger deals, if they so wish. Shifting from a 75k investment to a 50k investment means they increase their opportunity without really sacrificing good will on the founders' part.
staunch 15y ago
1. AH could offer $50k on the same terms if they wanted, and most companies would probably take it. It's not like Yuri/Ron have any exclusivity arrangement. 2. YC classes have grown in size a lot. It's probably a bit more expensive than they planned, so they don't mind sharing the load. 3. Having AH as a partner helps the startups, which means they're more likely to succeed (hopefully).

bfe 15y ago

Interesting that both SVA and AH responded to the success of YC not by setting up separate programs to emulate it, but by coalescing around it. This clearly made sense for Milner as a relative newcomer but the other two groups had no shortage of connections and capabilities in place and could easily have taken either route. YC keeps increasing the margin by which it is the top program of its kind.

joshu 15y ago
A16z doesn't have the bandwidth to start one of these, I think.
pbreit 15y ago
"easily" Creating and running YC is not in the least bit easy.
- bfe 15y ago
  Certainly not! Especially being the forerunners of their new model. I just meant that SVA and AH could, if anybody anywhere could, and if they so desired, have concentrated their resources to try to set up a new program that emulates YC. Compared to anyone else's chances, in the universe, to emulate YC, SVA or AH would have had the financial, intellectual, and social resources to have had a relatively easier go at it. But neither of them tried to emulate, they both chose instead to coalesce around and go to war with the YC they had. I think that choice is non-trivial, and significant; and it lends ever more acceleration to YC putting ever greater depth between itself and any potential competing program.

betterlabs 15y 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.

pg 15y 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.
- betterlabs 15y 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.
wavephorm 15y 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.

nhangen 15y ago

This is great because it now means you not only get PG's advice (and the YC team), but that of Milner AND AH to boot. Makes me really excited about October 31.

knarf55 15y ago

This is really cool. Love the fact that they are trusting PG and team's filtering process and guidance to build great startups. This is super sweet for the founders as well since they will provide some awesome advice and guidance.

Kavan 15y ago

Congrats YC! Fills a gap too. Ron - Seed, AH - VC, Yuri/DST mezzanine. I am a little surprised that Ron and Yuri let them in on such a good deal. I am sure a lot of VCs would jump at this opportunity.