We earlier reported that Y Combinator, which unarguably is one of the biggest and most famed churner of notable startups currently, has filed for a new VC Fund with the SEC, by the name of Y Combinator Continuity Fund LLP. We now know, for sure, that such a fund does exist and for what all reasons.
At the time of our previous post, Rohit had argued that a name like “Continuity” suggested that Y Combinator may be looking to provide money for Y Combinator startups in later stages. And that’s exactly what the most sought-after startup accelerator program is doing.
The same was revealed by the organization’s president, Sam Altman in a recently published blog post, where he clarifies as to how there were “a lot of reasons” why YC wasn’t doing this sort of funding earlier, and why it has decided to do so now. He says,
There were a lot of reasons why we couldn’t do this in the past. But starting in the Summer of 2014, we added a pro rata provision to our standard investment documents, and starting now, we’re going to aim to support all these companies in future financing rounds by doing our pro rata. We will try to do this for every company in every round with a post-money valuation of $250 million or less.
However, Altman further states, that YC is “not going to lead any of these rounds or set the terms, just follow other investors”.
And by doing this in every YC company, “there will be no signaling issue of Y Combinator supporting some companies and not others”.