Exactly. $1.7M premoney valuation and a chance to get advice from PG and others who have helped 6 unicorns come about and, per @sama, 22 others who can get there is pretty darn good, IMO.
- the brand is enormous. All my funding discussions have been warm intros or a network I built myself, slowly (same for client work with one exception). Saying "we're YC" enables cold emails to actually get read. Same as having candidates to a job ad from MIT, Stanford, Harvard... it gets them a phone call and some attention. It helps not just with funding, but with hiring and even B2B sales (I personally looked at Heap's product for a client and talked to their sales team, only because I heard it was YC funded).
- valuation, according to a better connected and experienced friend, jumps around 4x post-acceptance on any future funding rounds. Related to first point. If our valuation had gone up that much, the maths wouldn't work out in favour of bootstrapping.
But what makes it really special is the lack of control. For example, I went into the final stages (10+ meetings, legal docs being drafted) of a $400k round... for 30%, with veto rights on practically everything and someone injected into management. It was tempting, especially pre-launch, but would have guaranteed no further rounds and misaligned incentives between us and investors.
Even the <10% offers wanted things like vetos and RFR on any further funding round, that removed virtually all control we had, and would make it a lot harder to raise an A round when the time came.
This, I think, was the major innovation brought about by YC. We're far from the days of Georges Doriot and DEC...
(As an aside Terrence, since you're reading this - you American angels should pop over to other countries some time, valuations are much friendlier!)
A third possibility is investors are lemmings and are too stupid to understand the unique insight you have into a big market.
As an investor who thought Instacart, Uber and BufferBox were really stupid ideas and missed a chance to invest in them (Uber through AngelList), I know this possibility is all too real. :)
This is basically what Warren Buffett does w/r/t Berkshire's portfolio cos. Though he invests less in frothy times and more in times of pessimism. But he's bottoms up too.
