YCombinator has been a huge inspiration for many a young startup. The whole investment/accelerator/incubator model is something I would love to see more of (esp here in my home town of Boise) but I have to wonder if YCombinator’s newest deal is a good thing or not.
Sequoia and the angel investors (Ron Conway, Paul Buchheit and Aydin Senkut) aren’t investing directly in Y Combinator. Instead, they are putting money into a new entity, managed by Y Combinator, that will make investments in new startups going forward. In other words, Y Combinator won’t just be investing their own capital any more, and they’ve got a larger war chest to expand operations.
Right now YCombinator has been successful by focusing on companies that they have direct contact with and can really nurture. While this new fund gives them greater reach at a time which makes a heck of a lot of sense to be branching out into early stage funding I wonder if it just dilutes their focus and distracts them from building great early stage companies.
Of note TechStars out of Colorado i another great model that is also aggressively expanding right now.
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