Orange Fund I
Fund Target: Y Combinator S14 startups that accept our investment.
on Aug 5 2014
Each batch, Y Combinator typically funds 60-80 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 only invest in startups that have at least one other investor. Otherwise, we'll place funds in escrow contingent upon others matching the dollar amount within 60 days.
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.
For startups that list on Wefunder, we have a wealth of data such as page views, time spent on profile, investment commitments, velocity of fundraise, and social media reach.
Our portfolio includes:
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 $12 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.
Investments will only be made in startups from Y Combinator's Winter 2015 class. This is a pool of approximately 80-100 startups. The Orange Fund selects startups based on our investing criteria.
The Orange Fund will make between 20 and 30 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.
After each investment is made, you'll be notified of the selection 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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