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Y Combinator, the X Factor of Tech (economist.com)

Posted by samzenpus on from the magic-touch dept.

universe520 writes: Since 2005 YC has taken on batches of promising founders, and this month will celebrate the funding of its 1,000th startup. Though about half of its startups have failed, which is typical of early-stage investing, it has had a head-turning record of success. In addition to Airbnb, YC has had a hand in Dropbox, a cloud-storage firm, and Stripe, a payments company. Eight of its firms have become what Valley folk call 'unicorns', valued at $1 billion or more. Combined, the companies it has invested in are worth around $65 billion (based on their most recent funding round), although YC's share is only a small fraction of that total—perhaps $1 billion-$2 billion. It is because of this record that YC has become a juggernaut in Silicon Valley.

8 of 54 comments (clear)

  1. Evaluation bubble by Anonymous Coward · · Score: 5, Insightful

    Is Airbnb really worth 25 billion? Really??? Dropbox at 10 billion?? And that's just somewhat successful YC stuff; Twitter, a company that is only good at losing investor money, is somehow valued at 19 billion.

    The real story here is the silly amount of "value" in companies that produce no tangible products. When this bubble pops, it's going to be really messy.

  2. The 90s are calling... by Errol+backfiring · · Score: 2

    I hear the 90s calling. They want their dot-com bubble back.

    --
    Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
    1. Re:The 90s are calling... by invictusvoyd · · Score: 4, Insightful

      Its nothing about the 90's dot com bubble really .. Where there are investment bankers , there is bound to be a bubble. Anywhere and everywhere .. It's like where there are programmers there's bound to be code ..

  3. Profit? by IamTheRealMike · · Score: 2

    I thought I read somewhere that none of Dropbox, Stripe or Airbnb actually make a profit? Is that really a success story if so?

    1. Re:Profit? by Anonymous Coward · · Score: 2, Insightful

      1. Build a non-tangible online company.
      2. Trick investors about a profitable future. If not possible, GOTO 6
      3. Everyone knows about your product and uses it.
      4. Success!
      5. GOTO 2

      6. Company has failed, never made any money.

    2. Re:Profit? by eulernet · · Score: 4, Insightful

      The success story is their ability to present something that has no value as something revolutionary and valuable.

      Everything is in the pitch.

  4. Re:"Y" determines sex. but "X" determines.... by GrumpySteen · · Score: 4, Informative

    The name Y Combinator has nothing to do with chromosomes.

  5. The end is near by Drunkulus · · Score: 3, Interesting

    The only reason there's so much venture capital is that interest rates are near zero and investors are willing to gamble on a better return. Once the Fed returns rates to historically normal levels, money for these dumbass startups will disappear. Same with insane real estate prices. A monthly payment on a million dollar mortgage at 3% interest is a bit over 4 grand, but at historically average rates of 8 to 10% that monthly payment will more than double.