We do not try to accept a specific number

Paul Graham: Venture Capital Trendsincluding the current group of 53, including, Y Combinator has now funded 564 startups. Where 287 of the total valuation of about $ 11.7 billion, while the previous 511 total financing reached $ 1.7 billion (* 1). As always, these figures mainly contributed by a few big winners. This $ 11.7 billion in valuation among the top 10 start-ups accounted for 8.6 billion. But behind it there is a large group of younger startups. There are more than 40 of them have the opportunity to become a big player. Last summer, when the size of our batch incubation enterprises reached 84, the situation began to become a bit uncontrollable, so we strengthen the screening mechanisms to reduce the size (* 2). Several reporters tried to interpret what you want about the great stories of the evidence, but this trend has nothing to do with the outside. The reason is that we find ourselves in with the n² algorithm, and it takes time to fix it. Fortunately, we found a number of techniques to YC partition, the problem now seems to have been resolved. With a new, more scalable model, as well as the size of only 53 companies, and now it feels like these do stroll. My inference is that before the next encounter bottlenecks, we were also able to expand the size of 2-3 times (* 3). One consequence of such a large scale funded startups raised is that we have the vision to see the trend early. And because the financing is precisely one of the main things we can help start-ups, so for investment trends observed for we are in a good position. Let me try to describe how these trends are. We'll start with the most basic question: with respect to the past, the future will be better or worse? Overall, investors will earn more or less? How acting forces, some would Air Jordan 6 lower returns, some will increase returns. I can not predict what a force will prevail, but I'll describe each of these forces, and then to you to judge. Changes in financing start-ups, there are two driving forces: start start getting cheaper and do startups become a more normal thing. 1986 I basically have two choices when university graduates: to find a job or graduate school. And now one more: entrepreneurship. This is a big change. Of course, basically in 1986, when you can go start a company, but the real possibility is very low. Start a consulting firm, or niche products companies seem to be possible, however, to start a company the opportunity to develop into big business seems unlikely (* 4). Transferred from graduate school to the path of entrepreneurship is that only happens once in several generations of great social change. I think we are just beginning this change. It is difficult to predict how much a fair. It will not be as big as the industrial revolution? Maybe, maybe not. But it is possible to cause large frightening Zhashe all, because in the past those big social change always. One thing is for sure, that there will be a lot of start-ups. Mid-twentieth century that a large hierarchical companies will be replaced by a network of smaller sized companies formed. This process does not just happen in Silicon Valley. It is from 10 years ago, much as the automobile industry are also involved. There are many ways its operations (* 5). Another big change is the driving force of the founder of a start-up companies are becoming cheaper and cheaper. In fact these two forces are relevant: start-up costs for start-ups fell precisely one of the reasons more and more start-ups become commonplace. In fact, starting a business takes less money means that the founder of the investors are increasingly dominant. Your energy and imagination of their needs are no less a point, but they need your money in the hands of no one so much. Because the founder prevailed, they could get the hand of their shares as well as control of the company will continue to grow. Accordingly, investors will get fewer shares and control. Does that mean investors money will become less? Not necessarily, because more and Nike Shoes more good startups. Total amount of shares owned by investors deserve startups may also increase because of the ideal growth rate of the number of start-ups is likely to be faster than their rate of decline in the share sold to investors. VC industry there is a rule of thumb that each year there are about 15 companies to be truly successful. Although many investors do not consciously figure as some of the cosmological constant, but I'm very sure it's not. Speed ​​of technological development may be limited, but that now is not the limiting factor. Otherwise, every successful startups likely to succeed in that month will be discovered. Now the number of start-ups is limited so popular, is the founder of a good number of companies set up, this figure will also grow. There are many this can be a great founder who ultimately did not open into the company. This can be a random degree from some of the most successful start-ups founded can be seen. Since many of the largest start-ups almost almost no birth, then surely there will be many equally good start-ups are not born. Perhaps 10 times or 50 times the size of the outstanding founder now not incoming. As more and more people are beginning to start a business like this, then the annual number of successful start-ups achieved could easily will develop from 15 to 50 or even 100 (* 6). But how to return? Returns will not be increasing the high valuation of the squeeze? I think the top institutions will make more money than in the past. High return on investment does not come under to underestimate the value. But rather to invest in really good company. So, if more and more companies this year, so the eyes of the most unique person will naturally have more opportunities. This means that the VC industry would be more variability. To identify and attract the best start-up company will do better, because Maxima more. And almost the only pick the rest, as they are now committed, but also a higher price. Founder of his own company controlled longer I think there is no problem. This empirical evidence is very clear: investors when founder CEOs earn less money than when founder bitch earned. Although a bit ashamed, but for investors, this is actually good news, because the wait time than the founder of micro-managing them less time. Angel investors and how? I think a lot of opportunities. Angel investors often make is a more disgusting things. The best parts of your business is not, unless you can be like Andy Bechtolsheim (Google angel investors) so lucky, but even if you invested in a start-up, until the VC came back, they always want to deprive you of the equity out. But now an angel investor to be able to Demo Day or AngelList this place, also have access to the same as the same VC deals. The VC angel investors will wash out from the equity calculation table are long gone. I think one of the biggest start-up investment opportunities currently untapped is quick to angel investment grade. With few investors understood from the start-ups they enter after the cost of financing. If a company is formed only by the founder, everything will grind to a halt Air Jordan 4 Retro during the financing, could easily six weeks to complete. The current high cost means low-cost financing investors have cut the remainder of the space. In this context, a low-cost means to make decisions quickly. If a reputable investors out of good condition and is willing to pay $ 100,000, and the promise is made within 24 hours or no decision, they can come into contact with almost all of the best deals, because every good start-ups will begin contacting them. The choice in their hands, because every bad startups will go first to them, but at least they can see everything. However, if the investor's bad reputation, always take a long time to make decisions, or to consult on the valuation of the founder will leave them in the final. As for the most promising start-ups, because the financing is often easier, and finally can easily become no chance. Then the number of successful start-ups will increase the number of new start-ups will not be a linear relationship? Probably not, for two reasons. First past the fear of entrepreneurship is a very effective filter. Now the cost of failure becomes lower, you can expect more attempts will founder. This is not a bad thing. In technology, innovation and reduces the cost of failure, increase the number of Air Jordan 1 failures, but still make you net, this kind of thing is very common. Another reason for the number of successful start-ups will not increase proportionally with the number of start-ups is the number of conflicts will be more and more creative. Despite the limited nature of good ideas is not the only reason 15 year success of start-ups, but the number of good ideas is necessarily limited, and more start-ups, the more we are likely to see a number of companies at the same time doing the same thing . If the conflict has become a very common idea, things will be very interesting, but also very bad. (* 7) is mainly due to the increasing number of early failure, the future will not start-up business or with past forms and geometric expanding. Past the obelisk will become pyramid. Spire will be a little wider, but will have a much broader base. For investors, what does this mean? One means there will be more opportunities for investors in the earliest stages, because that is our imagination cubic volume of the fastest growing areas. Imagine corresponding corporate investors obelisk obelisk. Then the team will be expanded into a pyramid in order to correspond with the start-up of the pyramid, all the competition are carried out in the spire, and the bottom into a vacuum. The opportunity to provide investors primarily to new investors ready, because the original investors or institutions willing to take the risk level is one thing they are most difficult to change. Different types of investors to adapt to different levels of risk, but each type who are deeply marked by its own special brand of risk, this is not just reflected in their follow-up process, is also reflected in the people who work there . I think, for the VC, the most dangerous, but also the greatest opportunity in the A round place. Rather, the significance of the past into a de facto A round B round. As we all know, now often in the A round of VC investment and too much money. They do it because it feels every A ferry companies have accounted for a large piece of their own, in order to make up their own opportunity cost of consumption of board seats. This means that a fair competition by a number of digital pushed the valuations (and investment) rather than the proportion of the company were sold. In other words, A round investors tend to make start-ups get our hands on more money than they want, the more promising start-ups more so. Some VC lied startups really need that much. Some VC is more, frankly, recognize themselves in their financial models for each company can get a share. But we all know A round of financing does not depend on what the best thing is to ask the company. But on the VC they expect the number of company-owned, market valuation is given, as well as investment. Like many bad things, this is not intentional. With the original assumptions obsolescence, VC industry will mess the point where. Trading and financial model VC industry is in need of investors when the founder established. A wheel of the time in a large share sold to the founder of VC is a very natural thing. But now the founders did not want to sell so much, and VC still stick to their position, because they can not determine if the wheel from each A share company bought less than 20%, then I still can not make money. The reason I call it the Nike King risk that, A round investors and they ought to serve startups and more and more do not, this situation tends to bite you in the end. The reason I call it opportunity, with the market shift from traditional VC business model, and now can be described as simmering. This means that the first to break with the past, the founder of the A round how much you want to sell (founder only the 'Option Pool' do not sell) how much to buy the VC will benefit immensely. If this happens VC industry would have any effect on it? Devil knows. But I bet some companies will go bankrupt. If you have a top VC funding start-ups started in accordance with the Air Jordan 5 Retro actual needs of the A round of investment, and allow flexible and change according to market stake, rather than vice Air Jordan Fusion versa, they'll be able to get the best start-ups. This is where career prospects. You can not always go against the market forces. Over the past 10 years, we have witnessed the share of start-ups in A round relentlessly sold in slow decline. 40% of the previous ratio is normal. VC now have 20% of the bottom line combat. But I have been waiting for this day, the bottom line of fall. That day is coming. You (VC) can look forward to it, boldly outlook. Who knows, maybe do things right VC can make more money. This does not happen the first time. Occasionally can generate a huge success hundredfold return, venture capital is such a business. For such financial model you have much confidence? Slightly lower chance tremendous success that sold shares to compensate A wheel fell twice. If you want to look for new opportunities to invest, look at what the founders complain about things. Founder is your customer, the customer complained that things unmet needs. I have been cited in which the founder of the most complained about two things - investor decision-making takes too long, excessive dilution A round, then these places can now take a good look. But the more common response is: do the founders hope to do. Note: I realize that is the measure of revenue rather than financing start-ups litmus test for success. The reason we refer to financial data because it is the data we can get. Discuss revenue figures can not get the most successful start-ups does not make sense, but we do not have data on that. We often follow an earlier stage startups to discuss revenue problem, because that is the way we measure progress, but when the company reaches a certain size seed stage investors do that again is a little presumptuous. In any event, it reflects the company's market capitalization is ultimately income, after investment and financing round valuations reflect market value by at least a place to infer. There are only 287 valuation because most of the remaining convertible notes by way of financing, although convertible valuations tend to have the bill, but that is already the upper limit of the valuation. 2 We do not try to accept a specific number. Even think there is no way to do it. We just have to try to be an effective screening of people. 3 Although you never know where the bottleneck, but I guess the next bottleneck may occur in coordination partners. 4 I realized that to start a company is not necessarily open startups. There will be a lot of people start ordinary company. But this audience with our investors not matter. Geoff Ralston said that in the mid-1980s, the founder of Silicon Valley start-ups seems to be something worth considering. But I know that for graduates on the east coast is not enough. 5 is one of the main causes of this trend since the mid-twentieth century, growing economic inequality in the United States. 1950 x division general manager of a large company will now be x company's founder, it will have a considerable stake. 6 If Congress passed the founder visa, generally can make us grow to 20 times, because 95 percent of the world's population lives outside the United States. 7 If creative conflict deteriorated to a certain extent, it is possible to change the meaning of start-ups. Our advice to start-ups are now usually is ignored competitors. We told them that competitive start-ups like racing rather than football; you do not need to go where the ball away opponents. But if creative conflict becomes commonplace, you may have done so. Really like that would be too bad. Unless noted, articles are original or compiled site, please indicate: articles from 36 Krypton