Isn't that possibly a selection bias though? Isn't it possible that the YC brand is still trending up while the market is starting to correct? Or do you believe there is no such thing as a YC brand and every YC startup is judged independently, thus giving you an unbiased sample of the market?
Granted, Jessica's a YC alum, but presumably the further out from YC you go, the less the YC brand matters and the more things like revenue start to influence funding.
What are the chances that VCs are planting these sort of stories in order to try to scare startups into accepting deals with terms that are more advantageous to the VCs? Exactly one week ago, there was a story printed in the New York Times that read very similarly to this one.
I do not think it is VC inspired, but this article does take a strange tone. "glut of Web start-ups"?
"A fundamental mismatch is now starting to show: While scores of Web companies were founded in recent years, there isn't enough venture capital to keep all of them going indefinitely."
Duh? Hasn't this been true since the dawn of time? What on earth is this observation?
I wouldn't say they are consciously planting them. But when people are interviewed by reporters they often say that something they want to happen is already happening.
If a handful of YC companies are truly asking for a $9M or 14M pre... as rumors are flying around in Silicon Valley state... Then, I could see why VC's might say that the market is overpriced and frothy. Especially, since 6 months earlier, those same startups were priced by YC at a $300k pre.
No doubt YC has a phenomenal brand, and does a great job, and has had a couple of impressive rounds raised recently by AirBnb and DropBox.
But, there's a huge segment of the startup ecosystem that doesn't really show up on HN.
MassChallenge is graduating 125 startups next month. Their last batch, last summer has raised $100M in total.
Angel List has helped over 700 startups get funded in the past 18 months.
Startup Chile just seed funded 125, and opened applications open for another 100 startups today.
Then, there's 500 Startups, IO Ventures, RockHealth, AngelPad, StartX, BlockBox, TechStars, etc... And, a number of those startups have raised really impressive rounds, but they don't tend to get the local blog coverage or coverage here on HN.
Who knows... Here's hoping things slow down a bit.
Yes, you're right, I mostly know about funding rounds raised by YC startups. It could be they are just unusually fortunate-- that YC's brand and connections are so powerful that they have insulated startups we fund from a downward trend affecting everyone else. But while I'd like to believe we had that kind of power, it seems unlikely.
Based on my chats with other founders, I think the seed financing market is still pretty strong. Companies that should get funded are still getting funded, and I don't see that changing anytime soon. I wouldn't get too worked up on the scary headline...
In reply to another comment I saw, this applies even to non-YC companies.
pg is right. If anything, companies that attack really
difficult problems and aim to address them will emerge. In short, we can expect to see some unbelievable startups in the near horizon doing stuff that will be uncomfortable for many established players. They will focus on getting to profit way more than focusing on investors, WSJ, Techcrunch etc.
This is the time for giant killers.
" It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only."
Really? I've talk to several VCs that were very active previously and they all agreed that valuations are frothy and now is not the time to invest. Naturally valuations are going to be lower since that's what the buyer's perception of that market.
