The speaker, Dalton, discusses why top investors, such as a16z, Sequoia, and Founders Fund, often invest in Y Combinator (YC) companies. He notes that these investors are not just saying they prefer to invest directly into their own funds, but rather, they are investing in YC companies.
Dalton argues that YC serves as a filter for venture capitalists (VCs), identifying promising startups. When a startup passes YC's rigorous application process, it's a signal that the company is worth investing in. YC also provides startups with funding, advice, and a network, and many of its top companies have pivoted during their time in the program.
However, YC can be a disadvantage for startups in terms of funding. If a company does well during YC and then raises funding from other investors, it dilutes the stake of the YC investors. This is because YC companies are often more attractive to VCs and seed funds after they have proven their worth through YC.
In conclusion, Dalton suggests that founders should consider the actions of investors rather than their public statements when deciding whether to participate in YC. He also advises founders to take more seriously the advice of investors who are willing to invest their own money in their startups.
1. The text discusses YC (Y Combinator), a platform that invests in startups.
2. The speaker mentions that top investors, such as a16z, Sequoia, and Founders Fund, have invested in many YC companies.
3. These investors are considered 'big names' in the startup world.
4. Despite the common perception that YC is not a good investment, top investors frequently invest in YC companies.
5. The speaker suggests that YC companies are often further along and more technical than average companies.
6. YC companies are less likely to raise money from other investors after YC, increasing competition for VCs and seed funds.
7. The speaker notes that seed funds, which are more limited than traditional VC funds, are often more interested in YC companies.
8. Companies that receive investment from seed funds after YC are often at higher valuations.
9. The speaker advises founders to consider the actions of top investors rather than their words or social media posts when deciding about investments.