Y Combinator’s newly announced plan to invest more capital into startups that take part in its accelerator program is more controversial than many first assumed.
By raising its so-called “standard deal” to include an additional $375,000, the U.S. program and investing group with hundreds of companies in each of its accelerator classes may have materially changed the earliest stage of investing. Professional early-stage investors around the world may see their offers lose luster, possibly changing how the youngest startups that take part in Y Combinator interact with external capital.
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Prior to the change, Y Combinator offered $125,000 to its accelerator participants in the form of a simple agreement for future equity, or SAFE, that reserves 7% of participating startups’ equity on a post-money basis. The …
