Y Combinator, one of Silicon Valley’s most well-known startup incubators, is tightening the purse strings. It announced today that it is decreasing the $150,000 investments startups get for graduating the program down to $80,000, saying the original amount was just too much.
In the past, startups who joined YC received $150,000 from famed investors Yuri Milner of DST Global, Ron Conway of SV Angel, and more recently, Andreessen-Horowitz. YC said in a blog post that it “ended up de facto managing [the investments], and it was awkward to manage something we hadn’t started.” Thus was born The YC VC Program, which now will give startups $80,000 and asks the investors to spend quality time in “office hours” with the entrepreneurs as a consolation prize.
General Catalyst and Maverick Capital will join Yuri Milner and Andreessen-Horowitz to each invest $20,000. It looks like Ron Conway has backed out of the investment pool. We’ve gotten in touch with Ron Conway about why this is; we’ve also reached out to reps from Andreessen and YC and will update this post upon hearing back.
YC went on to explain in its blog post that the $150,000 amount was actually causing problems for those startups that didn’t “make it” and was too much money for the ones who went on to become profitable. By halving the amount invested, the incubators hopes it will also “make [the problems] at most half as bad.”
As usual, the $80,000 will be given to the startups as convertible notes that YC says have no valuation cap and no discount.