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May 01, 2009, 0 Comments

Why Y Combinator’s Terms Are Poor

A thoughtful and detailed analysis of the numbers behind Y Combinator’s seed funding program, as compared with a typical seed-stage angel investment:

YC argues their advice and connections are worth this premium. I respectfully disagree. Advice and connections for even idea-stage entrepreneurs are easy to find with a little initiative, and if you don’t have that, you’ll fail as an entrepreneur. YC’s connections, Demo Day, and brand are indeed value-added, but it’s hard to argue they’re worth ten times an angel and free advice and connections.

YC supporters say their teams are little more than first-time entrepreneurs with ideas. That’s generally true, but YC’s hackers are able to build most prototypes in 3 months anyway. Is it worth 3 months working by yourself to get 10x a better deal? I think so.

I can only assume that similar arguments exist with respect to our friends at LaunchBox Digital and TechStars.

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Avatar of M. Jackson Wilkinson

I'm M. Jackson Wilkinson, a technologist, designer, speaker, educator, and writer in San Francisco. I'm the CEO and Founder of WeSprout, which is coming soon. I'm from Philadelphia, went to Bowdoin College in Maine, root for the Phillies, and love to sing.

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