Government Inefficiency, Redux

Even in a rough economy, apparently, someone out there is doing something:

Silicon Valley-based startup incubator Y Combinator is getting just over one application per minute, according to a Tweet from co-founder and partner Paul Graham.

In an earlier interview, Y Combinator founder Paul Graham stated that the total value of the 316 companies funded by YC is about 3 billion dollars - possibly as much as 4.7 billion.  Total investment on the part of YC?

About 5 million dollars.  That's an investment of about $15,000 per company.

Graham goes on to point out that YC generally has a 2%-10% stake in the companies they invest in - so the total initial investment in these companies range from $30,000 to $750,000.  Let's be pessimistic, and say that on average, these companies raised $500,000 in initial private investments from YC and other sources.  That's 1.6 billion dollars in investments, going to companies that are now valued at 2-3x their initial investment.

Say each of those companies employs... oh, 8 people.  Two founders, someone to handle the finances, three folks doing the day-to-day work, and a couple additional people to handle sales and marketing.

That's 316 companies, at 8 jobs each, for a total of 2,528 jobs created at the cost of 1.6 billion dollars... or about $62,500 per job.

As I've noted before, under President Obama's "jobs plan", we're looking at a cost of $1,600,000 per job.

In other words... private investment, in the form of Y Combinator and other investment firms, is 25 times more efficient at turning investment dollars into jobs than the proposed "jobs" bill.

If the government were to flush Obama's jobs bill and instead loan that proposed $447 billion to investment firms like Y Combinator, we could potentially see 7,152,000 new jobs created in over three quarters of a million new businesses.  That's enough jobs to employ every available worker in Wyoming, Vermont and North Dakota combined.

Of course, with investment spread out like that, we wouldn't have the laser-like focus on protecting the taxpayer's money that has given us such rock-solid, non-political investments like Solyndra and Granite Reliable.  (Edit: Oh, and now SunPower, as well.  Joy.)

Y'know, I think I could live with that.