Archives for January 2011

The Fuss Over Y-Combinator’s Start Fund

Much punditry has been dished out about the Start Fund recently set up by Y Combinator, Yuri Milner and SV Angel.   I think it is interesting, though it feels a bit like bubble-style thinking to me.  I try to take a balanced and detached perspective; I thought an alternative and quite healthy perspective was offered by Roger Ehrenberg, Managing Partner of IA Ventures.  In particular I agree with Roger that: (i) the frothy Silicon Valley echo chamber is just a slice of the overall angel activity and (ii) receiving debt returns for taking equity risk is not sustainable.

In the food for thought realm, however, I do think that the Y Combinator story is an interesting one.  I guess those guys are pretty clever – it just keeps getting better.  It is as if they’ve figured out a perpetual motion machine -a way to profit from building the mother of all of incubators. It’s like a self-fueling beast at this point; applications go up, selectivity goes up, quality of mentors go up, advantages of graduating go up, likelihood of success goes up and then two things happen: they make more money (because they take some of the common stock of the participating companies and get great sponsors).  And then applications go up again, starting the cycle anew.  Boston’s awesome new MassChallenge program would benefit immensely from such a self-fueling effect if they can get one going…