Will Y Combinator fund a service Company?

Re:Will Y Combinator fund a service Company? by rwalling on Friday October 03, 2008 @12:58PM (#322819)

YC funds startup with great growth potential; companies that can "scale" well. Service companies scale linearly, and require you to hire additional personnel to grow, whereas product companies scale exponentially compared to personnel.

So my guess is YC will not fund a service company.

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Re:Will Y Combinator fund a service Company? by khurrams on Friday October 03, 2008 @01:34PM (#322847)

This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?

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Re:Will Y Combinator fund a service Company? by pg on Friday October 03, 2008 @01:47PM (#322863)

Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.

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Re:Will Y Combinator fund a service Company? by Retric on Friday October 03, 2008 @02:41PM (#322930)

It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.

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Re:Will Y Combinator fund a service Company? by motoko on Friday October 03, 2008 @11:01PM (#323307)

Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?

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Re:Will Y Combinator fund a service Company? by motoko on Saturday October 04, 2008 @01:47AM (#323368)

Hm, on closer inspection, I would for 10 billion and an average 2x return. I sure that wish I could delete both these comments.

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Re:Will Y Combinator fund a service Company? by DabAsteroid on Saturday October 04, 2008 @05:57AM (#323424)

Venture investors are not looking for things with a low risk of failure.

Doug Richard (of BBC's Dragons' Den) says the same thing, here (starts at 4:10 of 6:57; moneyline at 5:30):

http://www.youtube.com/watch?v=Z71dl3lZdvU

You have to understand how investment works. The reason it [the risk-focused pitch] works well is because if there is no risk, there cannot be commensurate reward. I'll repeat it. If there is no risk, there can't be reward. If it's not a risky opportunity, then there's no reward of equal dimension. If you come to me and say, "I've got a risk-free investment," the first thing I know is, there's not much money to be made. There's no free lunch in this world.

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Re:Will Y Combinator fund a service Company? by khurrams on Friday October 03, 2008 @02:05PM (#322894)

I agree !

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