Renowned Silicon Valley-based accelerator Y Combinator has increased its standard deal size to US$500,000.
The Y Combinator programme, which played a role in the early days of companies like Airbnb, Coinbase and Dropbox among others, is increasingly selecting African tech startups to take part in its programme.
Its alumni features continental royalty such as Flutterwave, Paystack and Kobo360 (not to mention Cowrywise, MarketForce, Kudi, WaystoCap, WorkPay, Healthlane, Trella, 54gene, CredPal, NALA and Breadfast).
Until now, YC invested US$125,000 for seven per cent equity, but under its new standard deal it will now also invest an additional US$375,000 on an uncapped SAFE with “Most Favoured Nation” (MFN) terms.
MFN means that this SAFE will take on the terms of the lowest cap SAFE – or other most favourable terms – that is issued between the start of the batch and the next equity round.
“Simply put, we’re giving the company money now but at terms you’ll negotiate with future investors,” YC said.
“This is the type of deal that we have wanted to offer YC founders for years – and with the recent success of YC companies, including 10 IPOs in 2021 and more to come this year, we are now able to do so. This sum will enable founders to focus on launching, building, and scaling their company. It will remove the immediate pressure to fundraise and accept less than favourable terms.”
