Y Combinator, an American technology startup accelerator, announced that it has revised its standard deal upwards for accelerator companies.
Last year, the accelerator reduced its investment ticket size to $125k for 7% equity. Now it is offering to invest a total of $500,000. It will still invest $125,000 for 7% and now also invest an additional $375,000 on an uncapped safe with an MFN.
The $375,000 is on an uncapped safe with “Most Favored Nation” (MFN) terms. MFN means that this safe will take on the terms of the lowest cap safe (or other most favorable terms) that is issued between the start of the batch and the next equity round. Simply put, Y Combinator is giving the company money now but at terms the company will negotiate with future investors.
According to Y Combinator’s president Geoff Ralston in a blog post , “This is the type of deal that we have wanted to offer YC founders for years — and with the recent success of YC companies, including ten IPOs in 2021 and more to come this year, we are now able to do so. This sum will enable founders to focus on launching, building, and scaling their company. It will remove the immediate pressure to fundraise and accept less than favorable terms.”
“Incidentally, we also hope that this deal will encourage more founders of any age and from every demographic group and geographic location to take the leap into the startup world, apply to YC, and build their own successful startup.”
Since 2005, we’ve funded over 3,000 startups and the companies have a combined valuation of over $600B
