Paul Graham of Y Combinator is sharing some interesting data in his Twitter feed this morning, breaking down the number of startups who have gone through the Y Combinator program and sold for more than $40 Million by the year they were funded (assuming this means funded by YC):
To which he followed up with a second tweet, breaking out the percentage of companies by batch who have reached this milestone:
In a blog post this morning startup incubator program Y Combinator introduced a new investment instrument as an alternative to convertible notes. They are calling it SAFE or “simple agreement for future equity”, which was created by YC partner and lawyer Carolyn Levy and all four version can be downloaded here 1) cap with no discount 2) discount, no cap 3) cap and discount and 4) MFN, no cap, no discount (similar to the “StartFund” or YCVC terms) along with a primer.
Y Combinator partner and cofounder Paul Graham confirmed YCVC investments in the current batch will be on safe instead of notes in the Hacker News thread discussing the announcement.
The post explains the goal of this new instrument and how it overcomes the downsides of convertible notes:
The disadvantage of convertible debt is that although it’s only nominally debt, the law cares what things are nominally, and there are all sorts of regulations about debt. There has to be a term, which in California can’t be too long, and there has to be an interest rate not too far from market rates. The interest on convertible notes makes conversion complicated, and the fact that the debt has a fixed term causes extra work for both parties when it has to be extended.
A safe is like a convertible note in that the investor buys not stock itself but the right to buy stock in an equity round when it occurs. A safe can have a valuation cap, or be uncapped, just like a note. But what the investor buys is not debt, but something more like a warrant. So there is no need to fix a term or decide on an interest rate.
As a founder who has raised on convertible notes myself for Mattermark, I find this promising because updating maturity dates certainly is a hassle. Additionally, with platforms like AngelList enabling more “party” rounds where a large number of small investors participate it can become quite logistically challenging to make sure everything gets signed when an update needs to take place.
As with any change to a well-worn pattern, it might take some time for investors to adopt this new approach… as well as a bit of legal review. It will be interesting to see how things play out at Demo Day for the current batch of startups.
Yesterday we published a list of the fastest growing venture-backed startups companies who have raised $80M or more, and were surprised to find there 584 companies in our database with funding at that level. Upon closer inspection, we found heavier funding for pharmaceutical and energy companies as well as a lot of private equity deals in companies you wouldn’t colloquially think of as tech startups. Among the companies who are venture backed, here are the 25 who have taken the most funding over the years.
New York startup eGifter was founded in 2011 in New York, and is lead by cofounders Tyler Roye, David Levinksy, Eric Manno and Mark Manno. The company revealed in a regulatory filing that they have received $450,000 in funding.
The company offer a mobile app for purchasing custom and personalized gift cards for yourself and for others, and notably released a feature allowing users to pay in Bitcoin. Fox News recently featured them in a very… interesting clip from FOX News:
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Last week we made our first pass at scoring investors, and with more than 6 months of growth data on their portfolio companies we saw some interesting trends emerge as part of the benchmarking experimentation process.
This week’s analysis focuses in on B2B startups in investor’s portfolios. Benchmarking B2B startups has been a significant task. No other database of companies tags startups by B2B/B2C/Marketplace and their specific business model (direct sales, advertising, etc.) with the same completeness and accuracy that you’ll find using Mattermark. We’ve also worked very hard to remove companies that have shut down.
Since our launch exactly 5 months ago in June 2013, one of the most frequently asked questions has been: When will you start scoring investors? With more than 6 months of data on startups in investors’ portfolios, we are ready to begin experimenting. View and download the analysis presentation on Slideshare.
This analysis explores some of the factors that need to be considered for benchmarking the performance of a VC’s current investments. Have feedback, ideas, opinions, questions, concerns? We want to hear all of it – drop us a note at email@example.com and let us know what we can do to make startup investor portfolio benchmarking work for you.
Title inspired by Aileen Lee’s excellent post this past weekend.