Dave Mcclure & Jordan Stein on YC, "Spray and Pray", and Games VCs Play | E1923

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Mar 30, 2024

Guest

Dave McClure, the founder of 500 Startups, and Jordan Stein from Cresset Partners dive into the world of venture capital, discussing their unique insights on Y Combinator's impact on the startup ecosystem. They debate the merits of the 'spray and pray' investment strategy while highlighting challenges in evaluating startups, especially during volatile market conditions. The conversation also touches on the importance of investing in outliers and harnessing talent from Latin America. The duo shares behind-the-scenes wisdom about navigating current trends and competitive dynamics in startup funding.

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ANECDOTE

500 Startups' YC Indexing

Dave McClure's 500 Startups indexed into 10% of YC companies in its early years.
This included successful investments in GitLab, PlanGrid, Stripe, and Reddit.

INSIGHT

Spray and Pray Strategy

"Spray and pray" involves making many investments at lower valuations than traditional seed funds.
This allows for higher risk-taking and the potential for outsized returns from a few winners.

ADVICE

YC Valuation Awareness

Be mindful of high valuations at YC Demo Day.
Early YC companies were easier to invest in due to lower valuations and smaller batch sizes.

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