YCombinator: The Power In An Accelerator Is Not The Cash

Cash Money

Note:  Two items worth mentioning related to this post are (1) that our newly-funded-with-State-money local accelerators must focus on mentoring, guidance, and ongoing business success over just writing a check, and (2) that Aloha Startups has begun a two-way sharing of select content with Nibletz.com, “the voice of startups everywhere else,” which highlights startups, entrepreneurs, and ecosystems NOT located in Silicon Valley. Led by Kyle Sandler, their team is prolific, sharp, and dives deeply into the challenges and successes from the non-typical regions. Since Hawaii isn’t Silicon Valley, and shouldn’t try to be, you’ll see that Nibletz covers many topics, startups, people, and ideas that we can use to help build Hawaii’s startup ecosystem into something that works for Hawaii.

Startups around the world, who’ve had their eyes set on Y Combinator, have all been scratching their heads over the past few days while stomaching a major change in the way the accelerator program at Y Combinator is run.http://nibletz.com/2012/11/combinator-power-accelerator-cash/

Two years ago Russian venture capitalist Yuri Milner and Ron Conway, principal at SV Angels, decided that they would invest $150,000 in seed money to each of Y Combinator’s startups. In a blog post Monday Y Combinator said that they often ended up managing the investments and the program, which was awkward because they hadn’t actually started it.

Y Combinator has announced a new program called YCVC where four Yuri Milner and three other firms will join together to invest $80,000 in each of the startups as opposed to the $150,000 figure. Joining Milner are Andreessen Horowitz, General Catalyst and Maverick Capital. Absent from this program is Conway and SV Angels.

Graham explained to Forbes magazine that while SV Angels fund doesn’t fit into the new mold of the program, Conway is still one of YC’s “favorite investors.”

So what’s going on?

Startup spinmasters everywhere are wondering why this change in investment strategy. Some worry does this have to do with the bubble bursting? Others wonder if it has to do with the general trend in consumer tech investing going down? While others understand that cash isn’t the core to a good accelerator program.

Read the full story at Nibletz.com…