42 * $40M * 6% (average stake YC gets in company) = $100M

According to http://techcrunch.com/2013/10/25/y-combinator-13-7b-valuatio...: - YC company valuations total $13.7 Billion - 511 companies total

$11,000 + $3000 * # of founders = total investment in YC companies (let's just go with 17k for 2 founders on average) = $17K

$17000 * 511 = $8.7M

$100M - $8.7M = $91.3M

Clearly a pretty good investment =P

What about dilution?

YC Equity stakes are likely unable to be diluted. Not all shares can just get 'diluted' aka expanded.

We get diluted. Every investor gets diluted. They may have the right to buy more stock in later rounds to maintain their percentage, but they do have to buy it, at the price of that round.

Interesting

Nope, YC's equity gets diluted like everyone else's. In fact, while many investors will buy more shares (at the new price) to keep their % ownership, YC does not, so their ownership % when the company exits is probably 3% or less, down from the original 6%.

Doesn't the 6% get diluted once additional money is invested?

yes, YC doesn't do pro rata. so basically they're down to probably at least 2-3%, but probably more.

account /2 for average probable dilution.

Are you saying that YC only invests 11K per company plus 3K per founder?

That's what YC says:

How much do you invest?

Usually $11,000 + $3000 per founder. So $17,000 for two founders, $20,000 for three or more. We've also arranged for each startup to get $80k in convertible notes automatically. The goal is usually to give you enough money to build an impressive prototype or version 1, which you can then use to get further funding.

http://ycombinator.com/faq.html

Currently it doesn't seem to be that low ( "we invest a small amount of money ($14-20k + an $80k note") from http://ycombinator.com/ , but yeah, it's not a huge amount of cash. It is very early stage startups though, remember.

I wonder whether stake is correlated (perhaps inversely) with valuation.

That's (very very roughly) 30% IRR which sounds kind of nuts to me.

$40m is the threshold, but this is a domain with a pretty steep power law distribution, so their total value is a good deal more than that.

It's 40MM or more. There are some significant outliers, like Dropbox and AirBnB.

Almost half of one snapchat (with only 20 employees).