Silicon Valley startup accelerator Y Combinator (YC) will put more money to work in startups for the same equity stake that it normally takes,the accelerator’s new president Sam Altman announced yesterday in a blog post. It will now put $120,000 to work in each startup in lieu of a 7 per cent stake. Earlier, the accelerator’s standard deal was $17,000 for 7 per cent, plus a safe that converted at the terms of the next money raised for another $80,000. “The investment will come in two chunks, which together will represent a flat 7% of the company. Although YC itself continues to have no LPs (and that way we have the flexibility to do things like fund non-profits), a portion of the investment is from a fund YC manages that does have LPs. Most people don’t do YC for the financial investment—they do it because they want the advice, the help of the network, the benefits of the program, etc. But still, more money for less equity is definitely better.” Sam Altman, YC Blog The other big change is that the new investment model will not include any venture capital investors. Venture capital investors started getting involved in deals in 2011 with Yuri Milner and SV Angel offering $150,000 to every startup that YC invested in on an uncapped convertible note. This eventually came to be known as YCVC and the $150,000 was later reduced to $80,000. The way it worked was that YC would invest $17,000 and the venture capital investors…
