So many great companies and so many early exits. Great for the VC's and angels - bad for the founders and early employees. And the users. Imagine if Heroku, reddit and others had stayed independent.

Facebook got this part right. Reject buyout offers and use them to raise capital at ever increasing obscene valuations - and build your product exactly as you want.

Founders often don't have a choice as to whether to accept buyout offers. In the case of OMGPOP, which had received a ton of VC funding and struggled for years until finally finding some success, I can definitely see why VCs would want to force a sale. (In fact, I wouldn't be surprised if VCs generally think that "make games for iOS" is not a business model that is capable of the kind of returns they need anymore, and they want to avoid taking further risk on that model—hence they forced the sale.)

Facebook rejecting buyout offers from larger companies not currently in the (at the time rather small) social space is not the same as OMGPOP rejecting a lucrative offer from a major player in a saturated market.

> Great for the VC's and angels - bad for the founders and early employees.

Actually PG has publicly stated that it's almost never good for YC for a startup to exit early. I can't seem to find the comment though.

There are always two sides for each story. You hear about a lot of successful companies that rejected a buyout, only to die in obscurity. I guess it all depends on the shareholders and what they want to do. Sometimes it's good to take home a good chunk of profit and look elsewhere.

All this says to me is that YC does not directly fund Googles and Facebooks. This is still very good for the founders. They can take their exit money and self-fund whatever they want.

Google and Facebook are two companies out of many thousands (if not millions) of startups. The odds of anybody that big coming out of anywhere are microscopic. That being said, Dropbox and AirBNB are massive and very young companies. Between those two and the 150+ startups funded in the past 18 months, saying there will be no world-changing startups out of YC is premature.

The biggest companies in the YC portfolio are independent and getting bigger all the time. It still remains to be seen whether a Facebook or Google will come out of YC.

> This likely means YC gets about $3-5million out of the deal, funding even more startups in the future. :)

I'm fairly sure that YC doesn't recycle the money off from wins, but instead returns it to their investors. YC is a for-profit fund that uses other people's money to give about $20k cash and $20k of training in exchange for 6% of their company.

When I wrote that I didn't mean it in a strict accounting sense, but in a holistic sense. ie, I don't see PG and Jessica buying a yacht with their YC earnings, but I can see them plowing the earnings back into the program. :)

do you have evidence? traditional vc funds don't recycle their money, but yc is not a traditional vc fund

YC raised an $8.25m fund in 2010, and the investors care about IRR and liquidity.

OMGpop (known as I'm In Like With You at the time) was a pre-fund investment.

Also, I expect that the limited partners of YC have given them unusually flexible and favorable terms.