That's smart. When we did it (Summer 2007) investors we talked to still didn't even know you guys did that. A couple asked, most didn't. I won't lie, we used it to our advantage.
I'm sure it only took a couple rounds before people started noticing you (and some alums) in the cap tables and realizing what's going on. Word spread. I have no doubt that now it is considered a signal.
Investing is like dating. You need to be right for them, and they need to be right for you. Just because you don't want to invest in someone doesn't mean they're a bad investment. Smarter angels & VCs probably realize this, but there's plenty of perfectly good money that would not go to companies who might be a good fit amongst the less savvy.
Super interesting story, and thanks for sharing. I think you're referring to your time at DraftMix, right? Admittedly that was a really hard connection to find online [see below].
That said, quietly using partner/alumni investment as a signal for VCs doesn't quite fit the "Startups are a perfect meritocracy" narrative I'd prefer to believe...
[below]
Interestingly, searching for "Matt Maroon" (on Google, Crunchbase, AngelList, etc) yields results like [0] that only mention Blue Frog. Same for your blog. Wouldn't care otherwise, but I wanted to know if your story could be true or to dismiss as an internet rant.
However there was one interview-like-thing [1] still hanging around the Google Index that connected DraftMix [2] with a "Matthew Maroon" as the CEO [3]
...and people talk about the death of privacy like it's no big thing. Remember, the real creeps don't post their research on a public forum (unless it's for harassment).
Posting that kind of research is needlessly creepy.
People claiming to have gone though YC on HN without a known name will get called out. Hang around HN long enough and you'll know who is who.
quietly using partner/alumni investment as a signal for VCs doesn't quite fit the "Startups are a perfect meritocracy" narrative I'd prefer to believe...
What led you believe that? I'd guess startup investment is 90% social, 5% metrics and 5% technical. Witness, for example, the YC investment thesis of it being all about the team applying. Team dynamics aren't a meritocracy (except in the most broad sense I guess).
Most investors think because a YC Partner invested, that must be the best company. And the YC Partners should know, they've spent the last three months with every company!
I'm sure the YC Partners' track record of "picking" is no better than SV Angel, a16z, Greylock, etc.
I think this tweak to the investment policy will contribute to eliminating the sub-par angel investors who base a majority of their investments on which companies received funding from YC partners. PG taking action to make his dreams a reality [1]
I don't think this is the case; they only need to infer "better than average" or "not a lemmon". The problem is everyone else is trading-off the research of others and abnormal volatility# results, which has dis-utility to the companies involved. In fact, it eventually would become a dis-incentive to join YC. It is this latter outcome that surely YC wants to avoid. They are not going to benefit from the pricing of current companies, so much as they would lose long-term value of their franchise. Ie, if it becomes a very "hit or miss" investment of Founder's time, the more capable founders may seek to mitigate their exposure to such a process.
I'm sure it only took a couple rounds before people started noticing you (and some alums) in the cap tables and realizing what's going on. Word spread. I have no doubt that now it is considered a signal.
Investing is like dating. You need to be right for them, and they need to be right for you. Just because you don't want to invest in someone doesn't mean they're a bad investment. Smarter angels & VCs probably realize this, but there's plenty of perfectly good money that would not go to companies who might be a good fit amongst the less savvy.