Tech in Africa
On June 26, Y Combinator president, Geoff Ralston shared an announcement that highlighted two changes.
First, a reduction in the investment amount for their standard deal from $150 000 to $125 000. But will maintain the standard equity requirement (7%) on startups they back. Y Combinator will reduce their pro-rata to 4% on all subsequent rounds. Simply put, in any other round the startup participates in, YC has a 4% participation right to increase their investment.
According to Mr. Ralston, the adjustment will enable them to fund 3,000 more innovators in the future.
Past adjustments
YC began in 2005 when its first investment was $20,000 for an equity stake of 6%. The investment sum rose to $150,000 in 2011 but the equity stake remained the same. The 2012-13period saw them reduce their investment to $100,000 but raise the stake to 7%.
In 2014, the fund raised the sum to $120,000 and invested ins several African startups namely, OMG Digital , Oolu, Paystack, Afrostream, and Flutterwave.
You can find more details on their current investment terms on their website.
TechCrunch attributes the adjustments to their intention to meet “switch to a leaner model.” Other factors include the ability to “work from anywhere” which dramatically lowers the running costs for startups.
