> The problem is that hypothetical VC fund will attract no rational limited partners with money because they know that startup founders can just take their invested dollars with no payback protection.
YC famously claims it is not a VC fund because it invests their own money, they wouldn’t have this problem.
>YC famously claims it is not a VC fund because it invests their own money,
Th label "VC fund" can be imprecise because YC itself has changed its structure over the years.
The original 2005 YCombinator where Paul Graham & Friends used some of their personal Yahoo wealth from selling ViaWeb ... instead of raising outside money from "limited partners" ... was the period when they were more like "angel investors".
But YC still doesn't do all the typical "vc fund" procedures such as take a board seat or negotiate a different % with each startup founder on a case-by-case basis. The VC funds like Sequoia/a16z/etc will require a board seat and negotiate different ownership percentages.
So today's YC is a "semi" VC fund depending which aspects are salient to you.
YC famously claims it is not a VC fund because it invests their own money, they wouldn’t have this problem.