Y Combinator‘s president Geoff Ralston announced this Monday that the firm has a new standard deal and that it will now give a $500,000 check to any company that enters its batch program. As it did before, YC will continue to invest $125,000 for 7% of every investee, but now it will also offer an additional $375,000 on an “uncapped safe with an MFN”.
According to the YC, MFN (or “Most Favored Nation”) terms means that the additional funding will be granted together with the usual $125,000 check, but that the terms of this extra funding will be discussed and negotiated with future investors in the following rounds that the startup will raise. It also later investors from getting better terms than the previous ones. In the case of YC, future negotiations will include the right to purchase 4% of any new money securities.
“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 ten 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 favorable terms,” said Ralston.