INSUBCONTINENT EXCLUSIVE:
In a message posted to its internal communications channel earlier this week, the massive startup accelerator Y Combinator said it will
change the terms of its own PPP (the YC pro rata investment program) and investing in companies raising seed and Series A rounds on a
case-by-case basis.The company began a policy of investing in every seed and Series A round for its portfolio companies back in 2015.Since
then, it has taken a 7% stake in every company that raised a priced seed and Series A round, investing in more than 300 Y Combinator
companies over nearly 500 rounds.Under its new policy, the accelerator is reducing its investment size from 7% to 4% and is only investing
on a case-by-case basis going forward.The reason for the change is that the number of companies in its portfolio has gotten too large for it
Said simply, investing in every round for every YC company requires more capital than we want to raise and manage
We always tell startups to stay small and manage their budgets carefully
commitment.YC addressed those concerns by saying it would not make an investment decision until a company had already received an initial
automatically in every priced seed and Series A/B round
So for those investments we do make, we will reduce the size of our pro rata and simplify its calculation to be a flat 4% participation
right in each priced round
If our ownership right before the round is less than 4%, we will cap our investment in the round at our then-current ownership
