While you didn't say YC LPs got 600X for their investments, you do write that they "made an incredible return on their investment." To that I say, maybe. It is probably fair to say they made back their money, but at what IRR over 2 decades? Hard to say. Was that $1B into $600B in follow-on investments? If so, that $1B is worth exactly $1B. Also, valuations can be self-fulfilling prophecies where each round brings more optimists to the table without actually being tethered to reality. The market is the real test, and it would appear that $600B was grade inflation.
I did not say 600x cause YC does not own the whole company. They only have a 7% stake which might or might not have diluted based on future rounds. So it’s not clear how much YC actually owns of the $600B
I think you've seized on the least important part of my point: you have absolutely no way of knowing if YC LPs made ANY return, nor when (important over a 20 year period) because they're under no obligation to disclose MOIC or IRR. The title and lede is YC "Private Success" but that's a conclusion without evidence. What is evident is that the market did not share pre-IPO investors' views on the value of the companies, and that's something underpinned by disclosure of actual financial records. The headline would be better posed as YC Public Struggle: Private Success?
Agreed. We cannot estimate the returns the LPs made. The only anecdotal evidence I have is that news funds will not line up to invest in YC if their track record is poor.
For what it's worth, here is an independent report on YC returns (again from an outsider's perspective. I did not link it as I was not sure about the credibility/accuracy.
While you didn't say YC LPs got 600X for their investments, you do write that they "made an incredible return on their investment." To that I say, maybe. It is probably fair to say they made back their money, but at what IRR over 2 decades? Hard to say. Was that $1B into $600B in follow-on investments? If so, that $1B is worth exactly $1B. Also, valuations can be self-fulfilling prophecies where each round brings more optimists to the table without actually being tethered to reality. The market is the real test, and it would appear that $600B was grade inflation.
I did not say 600x cause YC does not own the whole company. They only have a 7% stake which might or might not have diluted based on future rounds. So it’s not clear how much YC actually owns of the $600B
I think you've seized on the least important part of my point: you have absolutely no way of knowing if YC LPs made ANY return, nor when (important over a 20 year period) because they're under no obligation to disclose MOIC or IRR. The title and lede is YC "Private Success" but that's a conclusion without evidence. What is evident is that the market did not share pre-IPO investors' views on the value of the companies, and that's something underpinned by disclosure of actual financial records. The headline would be better posed as YC Public Struggle: Private Success?
Agreed. We cannot estimate the returns the LPs made. The only anecdotal evidence I have is that news funds will not line up to invest in YC if their track record is poor.
For what it's worth, here is an independent report on YC returns (again from an outsider's perspective. I did not link it as I was not sure about the credibility/accuracy.