On what terms does Y-Combinator invest?
Y-Combinator has a standard deal for all their investments. They invest $500,000 in every company on standard terms.
„Our $500K investment is made on 2 separate safes:
- We invest $125,000 on a post-money safe in return for 7% of your company (the “$125k safe”)
- We invest $375,000 on an uncapped safe with a Most Favored Nation (“MFN”) provision (the “MFN safe”)
The MFN safe will take on the terms of the lowest cap safe (or other most favorable terms) issued between the start of the batch and the company’s next equity round. Simply put, we’re giving the company money now but at the terms you will negotiate with other investors later.
Both investments happen at the same time; they are not contingent on any milestones.
YC Batch Investment: YC, the company, and the founders sign the $125k safe and the MFN safe“