Mar 9, 2018 · 59m · y-combinator
Andy Bromberg - Startup Investor School Day 4 · Y Combinator
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this Y Combinator Startup Investor School presentation, CoinList CEO Andy Bromberg presents a comprehensive history of early-stage venture capital, tracing its evolution from mid-20th-century institutional VC to modern token sales and democratized angel investing. Through historical analysis and an interactive Q&A session, Bromberg highlights key macro trends, structural legal innovations, and the emerging paradigms of crypto fundraising.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 1.4 Guest teaching 1.0 Guest disagreement 0.4 The partners pushing back 1.0
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 56:25 Refuting the comparison between ICOs and IPOs
Andy firmly corrects the premise that ICOs resemble IPOs, calling it an unfortunate misnomer and explaining that ICOs function strictly like early-stage seed rounds.
Hardest push from the partners ▶ 51:40 Pushing back on the assumption that faster liquidity is betterThe host challenges the notion that fast liquidity is inherently good, citing historical 11-year hold returns in DEC and Dropbox to argue that slower liquidity often yields higher value.
Biggest teaching moment ▶ 48:48 Explaining token value accrual vs company equityAndy educates the room and host on why value in decentralised networks accrues to tokens rather than equity, effectively turning protocol companies into holding vehicles rather than fee-collecting corporations.
The partners hold their own ▶ 47:48 Explaining why YC cannot simply modify the SAFE for ICOsThe host demonstrates deep legal and operational expertise in YC's instrument design, explaining that adding provisions for speculative token mechanics destroys the SAFE's defining simplicity.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| History of Venture Capital: 1940s to 1970s | 0 | 0 | 0 | 0 | Solo lecture segment where Andy Bromberg outlines the earliest decades of venture capital from ARDC to the 1970s. The host does not speak. | |
| The 1980s Venture Boom, Market Shifts, and 1990s Dot-Com Era | 0 | 0 | 0 | 0 | Monologue presentation detailing the institutional capital boom of the 1980s and the dot-com bubble of the 1990s. No interaction takes place. | |
| Post-Bubble Recovery, Accelerators, Convertible Notes, and Angel Platforms | 0 | 0 | 0 | 0 | Andy presents on the post-bubble recovery, the emergence of accelerators like YC, and the standardisation of convertible notes. No host involvement. | |
| The 2010s Evolution: JOBS Act, YC SAFE, ICOs, and Angel Democratization | 0 | 0 | 0 | 0 | Monologue explaining the regulatory impacts of the JOBS Act, the launch of the YC SAFE, and the emergence of token sales and angel democratisation. | |
| Current Landscape: Equity Seed vs. Token Fundraising & Filecoin Case Study | 0 | 0 | 0 | 0 | Andy delivers a deep dive comparing equity seed deals to SAFT/token models using Filecoin as a concrete mechanics example. Sole speaker. | |
| Future Outlook for Early-Stage Investing and Key Takeaways | 4 | 3 | 1 | 3 | The Q&A opens with the host stepping in to ask how investors evaluate quality without meeting founders in person. Andy explains how diligence works across pseudonymous and open-source crypto projects. | |
| Q&A: Crypto Lobbying, SAFE Dynamics, Value Accrual, and Liquidity Realities | 6 | 4 | 2 | 4 | The host articulates why modifying the SAFE for ICOs breaks its core simplicity and questions whether instant liquidity is actually beneficial compared to long-term holds like Dropbox. Andy explains token value accrual and lockups. |
Statements from this episode (21)
Bromberg: The venture market consistently trends toward faster liquidity
“The arc of the market bends towards liquidity. And we'll see this over time starting early and going all the way to now that liquidity and faster liquidity, ah, is something the market's always pushing towards.”
Bromberg: Startup liquidity timelines will revert to moving faster again
“Certainly in the last few years we've seen, ah, the speed to liquidity go down, ah, we think that's gonna revert back and we're gonna see that, that come faster again.”
Bromberg: ARDC returned 500x on DEC over 11 years
“ARDC really had what we consider to be the first venture win. So they invested in Digital Equipment Corporation and returned about 500 X in 11 years there.”
Bromberg: Early VC required founders to self-fund hundreds of thousands
“We saw that for basically the first 40 years of venture, you had to invest hundreds of thousands of dollars of your own money or scrounge it up from someone. Before a venture fund would invest in you.”
Bromberg: CRV launched at $5M and Kleiner Perkins at $7M in the 1970s
“In 1970, CRV was a five million dollar fund, and KP was a seven million dollar fund. Ah, those are smaller than most investments those funds make today in raw dollars, but that was the entire fund size at that point in the 19 seventies.”
Bromberg: 1980s VC funds exploded from a few dozen to over 650
“There were a few
Dozen funds in the early eighties.
There were more than 650 at the end of the eighties.”
Bromberg: VC had $12B AUM in 1996, but saw $120B invested in 2000
“In 1996, the venture industry as a whole had an AUM of about twelve billion dollars.
In the calendar year 2000, LPs put a hundred and twenty billion dollars into venture.”
Bromberg: Dot-com era VC funds commanded 30% to 40% carried interest
“Carry changed.
Funds were getting 30, sometimes even 40% carry on these deals, because there was liquid so quickly, and people couldn't put enough money into the space”
Bromberg: Between 2002 and 2009, VC returned just $220B on $205B invested
“2002 to 2009, it was about two hundred and five billion invested in venture and about two hundred and twenty billion returned”
Bromberg: Early-stage deals historically used only equity before convertible notes
“Historically, all of these deals had been done with just equity, straight equity, selling preferred stock.”
Bromberg: Startup seed rounds crested $1M for the first time around 2010
“In 2010 after the recession more angels, more seed funds investing smaller and smaller amounts. At the same time, we saw seed rounds crest a million dollars for the first time”
Bromberg: ICO Industry May Need JOBS Act-Style Safe Harbor Legislation
“In the same way we saw the Jobs Act in 2012, I wouldn't be surprised if the ICO industry needs something similar. If there's a non-exemptive safe harbor or some legislation around, ah, codifying some of the rules and guidelines around ICO, ICO fundraising.”
Bromberg: ICOs raise $10M to $200M via SAFTs
“Token fundraising ICOs, mostly raised on what are called SAFTS, Simple Agreements for Future Tokens... Mostly raised from hedge funds, venture funds, institutions, and again, angels putting money into these ICOs. But they're raising 10 to two hundred million d…”
Bromberg: A token is an incentive layer on a network
“A token's an incentive layer on top of a network... We can layer markets on these decentralized networks.”
Bromberg: Early ICO rounds will increasingly resemble traditional seed funding
“I think we'll see more bifurcation between really early ICO rounds and later ICO rounds, where in the early rounds it'll look a lot more like traditional seed funding than it does today.”
Bromberg: European ICOs have raised as much capital as US ICOs
“Right now, it is a very global phenomenon, so about as much money has been raised by ICOs based in Europe as based in the United States”
Bromberg: Crypto and Venture Capital Will See Much More Lobbying
“I think, especially given the attention given to regulation in the space, we will see way more lobbying happening in crypto and in venture capital over the coming years.”
Bromberg: In Well-Built Token Networks, No Value Accrues to the Company
“If the network's built well, we would argue that no value actually accrues to the company itself. The purpose of the token is to remove the centralized party. And so the company itself, the LLC or the corporation shouldn't get transaction fees. They shouldn't …”
Bromberg: Massive Number of Token Companies Will Fail Running Out of Money
“The reality of the situation is that a massive number of token companies are going to crash and burn because they run out of money and their network will never really reach its potential.”