I think that's exciting because raising an A is really stressful and time consuming, and often as a startup you need to pivot and do short-term non-optimal things to be able to raise it. If that same "non-bullshit" that YC is using for seed-stage is used for the A, I'm sure it'll improve startups in the long-term.

Our hope is that we can limit as much of the BS as possible while helping companies and investors focus on the parts that matter. Doing that should increase the rate at which YC cos get quality As done.

"as a startup you need to pivot and do short-term non-optimal things to be able to raise it"

Could you elaborate?

I assume GP is talking about dedicating time effort and energy to round up the money vs. spending that time effort and energy building the product.

At $small_startup_where_i_was_employee_3, when we were raising, it was the CEO's full time focus, and cost a fair bit of money to generate the meetings, be in the right cities, etc, etc. He was also responsible for a lot of our marketing efforts (4 person co) so that took a toll, and shuffled onto others shoulders where it wasn't our strength.

Yes, but also even the product/company vision sometimes need to slightly change in the short-term to get those critical metric numbers to line-up with VCs' expectation. I.e. getting a few important contracts to prove product-market fit even if it's very costly for a small startup whereas it would have been wiser to wait a bit, focus on the product and scale the team before tackling these contracts.

Ah okay.

Yes I saw such things too.

Company wanted to rise $4M and the investors wanted a "Cloud Product" with >10k customers etc.

Which was ridiculous, because we needed the money for the stuff we already did and it was an on-premis solution for like 10 big corporations.

We think this is going to be an interesting new way for companies to raise their A rounds. Here to answer any questions people have about it.

Obvious thing to say is: is this limited to YC companies, or can external companies apply too? And if so, what's the "cost" (equity / etc)?

Thanks.

How does YC think about signaling issues (in general and specific to YC)?

Important question. We think signaling is a tricky subject, especially with the number of VCs investing in As. There's a lot to unpack there, which I'll write about in the future.

For YC - we're thinking actively how to prevent any signaling. That's why we invest pro-rata in all of our companies in the same way.

What are "signaling issues"? Signaling that you're seeking a series A, or that you're seeking a series A from YC?

YC typically invests at the seed stage. If YC makes, or doesn't make, a large follow up investment for some companies in series A it sends a signal to other investors about what YC thinks about the company. Since YC has access to information about the company's financials from already being an investor this kind of thing can influence other investors to make, or avoid making, an investment.

I don't believe this is an issue. YC's stance is to always participate in their pro rata.

"We exercise YC’s pro rata investing rights in all follow-on priced financing rounds, beginning with a company’s first priced round. At post-money valuations equal to or below $300M, we exercise our rights in all companies where we have a formal pro rata right."

From: https://www.ycombinator.com/continuity/

Yes, and per further up in this comment chain the purpose of that is to avoid signaling issues:

> For YC - we're thinking actively how to prevent any signaling. That's why we invest pro-rata in all of our companies in the same way.

Is the "signaling" idea mostly about the differential signal that would be sent about companies they didn't invest in, if this automatic policy were not in place? Like, no matter how awesome Company A is, if YC chose to invest a disproportionate amount of money in Company A, then everyone would say, "what's wrong with Company B?"

I believe the signaling issues are companies which are admitted to YC Series A and those that are not.

How has the series A stage changed over the last few years?

How does it differ in focus from early stage YC batches?

From TFA, it looks exclusively focussed on fundraising and not at all on starting/growing a business, developing product, dealing with users etc.

Dumb question: do you have to be a YC-backed company to participate?

Not dumb at all. It's something we thought about a lot. The program is just for YC companies, though we'll continue to release information and learnings for other people.

Why?

If someone has “seeded” from personal funds/friends/family and gotten to a stage of reasonable traction, why disqualify them from direct entry into Series A, or artificially force them into Seed even when they’re clearly past that stage?

Easier to start with a focused group of people you have some relationship with.

Because the Series A program is free (no equity) and YC, although very founder friendly, isn’t a charity.

No charity expected, being very founder friendly is sufficient. I must have missed this bit - “Series A program is free”.

In any case, what I wanted to say is an independent Series A program (that allows direct entry in addition to Seed Program graduates), parallel (and similar) to the seed program, sounds like a good idea. Maybe that’s what this experiment might morph into eventually.

Any chance you guys would open it up to YC alums with a new company? :)

Aaron, thanks for answering these questions.

What is the YC Series A program's advice to founders around giving round allocation to prior investors? Is there an official stance on who should be let in?

I've found with popular YC seed rounds that the founders turn to their YC partners to ask who should get in. Extending this to A's is a bit scary from a concentration of power standpoint.

1. Will there be any additional investment in the A outside of YC Continuity?

2. How much do you think YC companies will raise post YC vs YC Series A?

From YC? No.

Not sure what you mean by the second question. Are you asking about the size of seed rounds vs. A rounds?

Sorry for the confusion. Yes, I was asking how much you think companies who graduate form YC should raise (say seed) compared to companies who are graduating from YC Series A.

That's heavily dependent on the company. There's a wide range that varies because of stage, market, required milestones, team, etc.

Overall, though, the companies coming out of the A program will raise significantly more than they did at seed.

How does it compare to atrium.co? Are both of these for the same type of companies?