Orange Fund III
Targeting 15-20 top Y Combinator Startups in the S15 Batch
Funded on Aug 16 2015
The Orange Fund invests in up to 20 top startups in Y Combinator's summer 2015 batch.
We have no official relationship with Y Combinator nor any special access to startups; rather, we're alumni of the program.
Y Combinator is the Harvard of startup accelerators, often the top choice for the most promising startups.
Orange Fund III invested in 18 companies from Y Combinator's summer 2016 batch.
Thousands of companies apply to Y Combinator - they accept ~2%. After three months of hard work these companies pitch at Demo Day. The Orange Fund managers then meet the companies one-on-one and invest in their 15-20 top picks.
The Orange Fund invests in up to 20 startups in Y Combinator that choose to accept our investment. Here's how they are chosen.
Each batch, Y Combinator typically funds 100-120 startups - fewer than 3% of applications are accepted. Startups make rapid progress on developing their product and selling to customers over the three months of the program.
We invest in founders who prove they can execute on product design. We spend an unreasonable amount of time using the product and giving detailed feedback to the founders. This helps us... and them.
When we sense good execution, but we're not the target customer, we find the startup potential customers. We learn, first-hand, how useful the product is at solving their problems. Win-win!
Great founders launch the simplest valuable thing that "mostly works", and then rapidly iterate to increase its utility. The speed at which they do so is an important predictor of success, and we measure it carefully.
We look at the fundamentals behind traction numbers. Were they driven by short-term tactics just to impress an audience? Or are they real and sustainable?
We invite founders to private dinners and learn what makes them tick. We prefer missionaries over mercenaries; those who feel an intense pain to fix a problem. Those who don't quit when times get tough.
We've funded 75+ startups over the last two years that increased in valuation over $4 billion since we've invested. We've built products with hundreds of thousands of users. We're alumni of Y Combinator, MIT, & Techstars
Our fully-owned subsidiary, Wefunder Advisors LLC, manages the fund on your behalf. Wefunder Advisors is an exempt reporting investment advisor.
If the Orange Fund has fewer than 95 investors, it's not regulated as a full-fledged mutual fund, which would dramatically increase costs and make the fund impractical as an investment vehicle.
We place priority on investors who invest high amounts early, but make exceptions for those who can help the portfolio of startups that the Fund invests in. This includes engineers and those with good social networks.
Startup investments have a very long term horizon. It typically takes 3-7 years for a successful company to have a liquidity event, when it either gets acquired or has an IPO.
We disperse funds to investors when any company in the portfolio has a liquidity event.
No. The Orange Fund is not a mutual fund. All capital will be invested in private companies in long-term, illiquid investments.
While there are exceptions, most Y Combinator startups will raise funding with a SAFE at a valuation cap of between $6 to $15 million.
The Orange Fund does not set terms, instead following the valuation and terms set by larger angel investors and venture capitalists. Many Y Combinator startups raise between $1 to $2 million for their seed round, so investments made by the Orange Fund will typically be less than 10% of their total fundraise.
At least 90% of funds will be investments made in startups from Y Combinator's Summer 2015 class. This is a pool of approximately 100-120 startups. We may invest up to 10% in Y Combinator startups from prior classes. The Orange Fund selects startups based on our investing criteria.
The Orange Fund will make between 15 and 25 investments. The exact number will depend on the quality of the Y Combinator batch.
The Orange Fund will invest in amounts as low as $25,000 and as high as $200,000 in each startup.
No. We need convince the founders to allow us to invest. To get access to the most promising startups, we move fast, write quick checks, and offer help with design and customers. The Orange Fund is also managed by Y Combinator alumni, which gets us in the door. We have a track record of getting access to hot Y Combinator startups, like Zenefits.
Wefunder is an alumnus of Y Combinator. However, we do not have a co-investing relationship with Y Combinator or any of their partners. Rather, we're well-networked with founders who are part of Y Combinator since we've attended the program in the past.
Within a couple weeks of Demo Day, you'll be notified of the selections via e-mail.
We're not allowed to offer tax advice. You'll receive a single K-1 from The Orange Fund each year. Your accountant can offer more specific advice.
Yes, if legal in your country. You should check with your lawyer and accountant.
Once a quarter, we update all investors on the status of the portfolio. Additionally, some startups in the portfolio may choose to send additional investor updates or requests for help to your Wefunder activity feed.
Of course! We pride ourselves on customer service. Speak with a Manager of The Orange Fund by scheduling a call at scheduleonce.com/wefunder
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