Silicon Valley Guru Blasts Y Combinator Hype
Y Combinator founder Paul Graham has been making waves recently with controversial pronouncements on start-up valuations (lower, thanks to the Facebook IPO) and Google Ventures (a supposed source of 'lowball' offers).
Now one prominent Silicon Valley venture capitalist is taking aim at Graham's own start-up program.
During his TechCrunch Disrupt talk on Wednesday, Vinod Khosla, founder of venture capital firm Khosla Ventures, criticized Y Combinator and similar accelerators for causing excessive valuations in the companies they mentor.
When companies leave Y Combinator, they have "so much hype that they get valuations [that] no one who will help the team are going to pay," Khosla said.
Khosla said he wasn't criticizing Y Combinator companies per se, just their inflated evaluations. Having such high valuations at such an early stage can repel VCs from investing in a start-up, he said.
Khosla's remarks came hours before before Disrupt announced the winner of its Startup Battlefield competition--which, it turned out, was Y Combinator-backed company YourMechanic, a web-service that connects car owners with local auto mechanics. In addition to the coveted Disrupt Cup, YourMechanic received $50,000.
The choice of winner raised an eyebrow or two: The decidedly more high-tech second-place finisher, Lit Motors, had created an all-electric "gyroscopically stabilized" motorcycle that's incapable of tipping over.