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Y Combinator will now invest $500,000 in accelerator companies – TechCrunch

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Y Combinator Boot Accelerator Announced This morning it updated its terms, and provided participating companies with more cash. The group will now invest $ 500,000 in start-ups.

Money comes in two different forms. The first is the well-known stock deal of Y Combinator, valued at $ 125,000 for 7% of accelerated start-ups. The group will now also offer $ 375,000 in the form of a ceiling-free SAFE note – a simple agreement for future capital – with the “most preferred country” clause.

Uncapped means there is no set maximum price at which the SAFE $ 375,000 will be converted into shares, while the “most preferred country” language guarantees that the Y Combinator will get a good deal like everyone else at a later conversion.

The fact that Y Combinator now offers more capital to startups is not surprising; Indeed, the one that took so long for the team to update its terms is the bigger surprise. Still, half a million dollars is much more in line with where pre-Seed and Seed investment markets have turned in recent years, meaning larger amounts in dollars at higher prices.

The updated terms do not mean that the accelerator itself will have a less reserved upside in portfolio companies. In fact, you could argue that Y Combinator’s updated terms are defensive in that it offers more capital in addition to, but not offset, its traditional shares in companies that pass through its doors. So the accelerator may be able to better attract the best start-ups in the early stages with bigger checks, even when it puts the initial investment in its stock to work at a price point that has proven to be historically worthwhile.

As an institution, Y Combinator updated itself as the start-up market developed. Focusing on personal work, YC was released during the plague. The result of this transition was more startups participating from other countries and markets, according to TechCrunch accounting. The group also moved to distant demonstration days, something we appreciated here at TechCrunch because we no longer have to travel from San Francisco to a large room with too few chairs.

It will be interesting to see how competing accelerators respond, if at all, to Y Combinator’s updated terms.

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