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It's harder to get into YC if you’ve been through another accelerator
- Xyik 11y agoInteresting that they have enough data, since I doubt even 1000 companies have gone through YC and counting the few hundred that have, probably only a small fraction of them have exited or died.
- tomasien 11y agoFWIW if anyone is evaluating doing a Techstars program, I'm more than happy to talk about my experience or help you find someone from the program you're considering - just reach out! tommy at alloy dot co
- santiagobasulto 11y agoGood guy here ^ Maybe you could write about it?
- tomasien 11y agoPlan on it! There are definitely some nuances to TS specifically that it is very appropriate to discuss on an individualized basis. I've had friends go through all the major and a few minor accelerators now, so I think I have a pretty good view on it and am always happy to discuss. It's a huge decision! TL;DR on TS for us it was a homerun, I don't believe it is for everybody. I believe there are times it a particular TS program is a better situation for a company than YC, but that there are MORE situations where it is better to do YC if you can. That's my 2 cents.
- taytus 11y agoExpect an email from me soon. Thanks!
- danieltillett 11y agoSam is there a common theme underlying the poorer track record of companies that have been through other accelerators (brakes in this case)?
- sama 11y agoWe don't fully understand it.
- tyre 11y agoMy guess is that companies doing multiple accelerators tend to be those playing startup or placing too much faith in external factors making them successful. Networks and alumni and advisors are important, but if you're optimizing on that front, you're distracted from the real work of building a company. The core of a great company is the same: work your ass off building something your users love. No accelerator can give you that.
- danieltillett 11y agoThis is my best guess too. As a founder of a moderately successful startup that has never been through an accelerator or taken outside investments I have had to be 100% focused on the business and its success by necessity. Why there is great value in a program like YC, it appears easy as a founder to fall into the trap of thinking getting into YC is an end in itself. This can’t be good for business success.
- fraserharris 11y agoThe obvious explanation is that companies that truly accelerated raised VC, removing the need for added acceleration.
- danieltillett 11y agoI can think of half a dozen plausible reasons for this effect, but only YC has the data.
- sachinag 11y agoI just turned down a program yesterday because of this concern. They were surprised to hear it, but good to have this post out there to back me up on it.
- danieltillett 11y agoGiven that YC has less than a 3% acceptance rate is it wise to turn down a program because it might affect your chance of getting into YC?
- sokoloff 11y agoIt depends on how "even" you think that 3% is distributed. If you believe that 90% of teams that apply have a 0.0001% chance, 10% have a 30-ish% chance, and you have good reason to think you're in the 10% case, probably. I don't know if that's the exact math, but it's probably a lot closer to that than to evenly distributed.
- danieltillett 11y agoThis is true, but unfortunately few founders know what pool they are in. My guess is it is like VC funding where all the VCs want to fund companies that don’t need the funds - the companies that don’t need to be in YC are the ones they want to choose.
- trevmckendrick 11y agoThis still confuses me. The expectation that a company should be "accelerated" reflects more on the accelerator than the company. (A cynical person would say that this philosophy is merely to incentivize companies to apply to only YC. I don't think that's the case and take Sam at his word.) But if the company is indeed the independent variable, then e.g. AirBnb and Dropbox succeeded because they were great companies, not because they went through YC. How do you claim on one hand that YC can materially improve your company, and on the other judge the company for not being improved after going through another accelerator?
- smileysteve 11y ago> The expectation that a company should be "accelerated" reflects more on the accelerator than the company. Or that the idea was less than successful and the executives could not execute even given resources.
- sama 11y agoIn general, the more money that a company has raised and the longer it's been around, the higher our expectations are. There are of course important exceptions to this, but we do look for evidence that founders can get things done.
- FreedomToCreate 11y agoWhat about companies that went through a specific type of accelerator (ex. hardware, or life science focused) and now wants to accelerate there business growth. How are these types of accelerators viewed by YC?
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- staunch 11y agoYC only helps ~3% of the startups that request help and now they're discouraging people from seeking help elsewhere. There's gotta be a better way of handling this.
- Alex3917 11y agoThey're not discouraging people from seeking help elsewhere, they're just saying that going through any accelerator starts the clock on your company.
- krschultz 11y agoWhat happens if you apply to YC and another accelerator and need to respond to the other accelerator while you are waiting to hear back from YC?
- _sentient 11y agoGood accelerators don't make exploding offers. People who make exploding offers are not just bad, they're also acutely aware of that fact, thus the manufactured scarcity.
- beambot 11y agoI don't know. I think a reasonable person could construe the YC statement [1] as manufactured scarcity too, even if YC makes the statement for sound reasons. It could be construed as a pre-exploding offer (or threat). Not that I agree with that interpretation; I think YC's viewpoint makes a lot of sense -- especially if it is a proven negative indicator of success. [1] "If you apply to other accelerators, then we'll be more critical of you."
- _sentient 11y agoI think it's clear that's not the intention here. The message is basically "the clock starts ticking with funding, so expect to meet a higher bar". This is similar to the notion that a startup can "sell the dream" up until the point where they have revenue, after which they're no longer selling dreams, they're selling the trend.
- santiagobasulto 11y ago> we like funding very early-stage companies Is this still true? Aren't you supposed to show good traction in order to have a good chance to get into YC?
- p4wnc6 11y agoI wonder if there is any kind of selection effect in this. YC attracts a lot of attention and helps steer opinions about what are attractive investment opportunities. If YC (for whatever reason) tends not to like companies that pass through multiple accelerators, maybe that has a side effect of making other people also not like them (just because YC doesn't) and eventually to build up some biases or (potentially unjustified) extra skepticism about them, and over time it means a more difficult funding landscape once you've attended multiple accelerators, regardless of the quality of the company. The post says that YC's reasoning is that conditioned on knowledge that the company attended multiple accelerators, YC expects to see more significant progress. I think this eliminates any usefulness of doing a randomized experiment on YC applications, where the property of previous accelerator attendance is hidden and we just observe whether YC would accept them or not (meaning, their fundamentals are good enough to be accepted). Instead, YC is saying that fundamentals that look good enough to be accepted are actually not good enough if you've been through an accelerator. On one hand I understand what they are saying, but on the other hand I also think that however an application comes to be sitting in front of your eyeballs shouldn't necessarily matter. It seems odd to me that the criteria for entry would be path dependent and the goalposts could move back or forth depending not on what the current state of your company is, but on how it arrived at that current state. Please note this is not a criticism. I am not a successful start-up accelerator. Just observations about this seeming counter-intuitive to me.
- zeeshanm 11y agoIMHO, accelerators early on in your startup life are to give you marketing boost to get customers when nobody gives a shit about you. More than anything. These days you can get a product ready with little or no money. As for advice, there is so much written out there if you just spend some time reading, thinking and doing things you can accelerate your startup growth. If you are going to go through accelerator, why not go with the one that carries the most social capital.
- colinsidoti 11y agoThis is interesting. I wonder what you feel companies should do in the event of a strong pivot: reincorporate or retain their cap table? Based solely on this post, it seems beneficial to reincorporate in order to retain an undiluted cap table. However, that seems contradictory to YC's thesis of investing in teams instead of ideas. If a team's first idea isn't successful, I imagine YC would want to retain its stake in whatever their new venture is. Also - is there any chance you've previously used pre-accelerators as a positive indication? "Letting up" on your standard assessment of a team simply because they had gone through a pre-accelerator could also explain this trend.
- sama 11y agoMy thinking has changed on this. I think investors shouldn't get a free option on every idea a founder ever has; after a few pivots and rounds I think a clean start is often a good idea.
- shostack 11y agoWhat is the best way for founders to structure their pivots then in your opinion?
- tomasien 11y agoThere's a lotta grumbles about Sam and YC taking this stance at VCs these days. FWIW I think it's about right but SO hard to judge.
- jeffwass 11y agoWhat if the investors were also mentors that helped guide the startup to a particular potentially-successful pivot?
- _sentient 11y agoThat's interesting. I'm guessing the investor complement to this would be the option to get your money back if a company chooses to go in a wildly different direction? I've seen that sentiment around more of late, possibly as a result of the glut of seed-stage startups who are pivoting after failing to raise an A.
- sunnypies 11y agowhat is the purpose of ycombinator in layman's terms? Serious answers please.
- czr80 11y agoIt's a record label for startups.
- flubert 11y agoAn ousider Layman's answer (meaning my guess is probably as good as yours): 1. Access to people who will introduce you to people with piles of money that is burning a hole in their pockets. 2. Advice from people who have seen companies go from small to big from the "inside".
- anoni 11y agoA badge of being "in".
- JarvisSong 11y agoIt's a rare entry point into the world of venture capital, a world that, for decades, was completely dominated by the old-boy network.
- jonathankoren 11y ago"was"?
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- rocky1138 11y agoFrom TFA: "exploding offer" What's an exploding offer?
- geofft 11y agoIt's usually used with reference to job offers, but the same concept applies to accelerator acceptances. From Google's magical definition thing: > a job offer that is retracted if not accepted within a very short period of time. "they can’t get first-rate students unless they use pressure tactics like exploding offers" See also https://blog.ycombinator.com/exploding-offers-suck https://blog.ycombinator.com/exploding-offers-suck : "As the world of accelerators gets more and more competitive, we’re seeing more and more exploding offers where an accelerator tries to force a company to make a decision about a funding offer before the company has a chance to finish talking to other accelerators."
- andrewaylett 11y ago"Some investors will try to prevent others from having time to decide by giving you an "exploding" offer, meaning one that's only valid for a few days." -- http://paulgraham.com/fr.html http://paulgraham.com/fr.html
- cookiecaper 11y agoExploding offers are an exploitation tactic intended to pressure you to commit to doing what the offering party wants ASAP, or else what you want will go away. It's OK for something like a firesale at your favorite retailer, but definitely not good on a more intimate scale, like a job or investment. If they actually want you, they'll let you take your time regardless of what their offer says, and an exploding offer is a big signal that you probably don't really want to work with them.
- alain94040 11y ago"we make funding decisions immediately afterward"[0] is the polite way to say that you have 24 hours to decide if you join that accelerator or the offer is rescinded. [0] http://www.ycombinator.com/about/ http://www.ycombinator.com/about/ sorry couldn't resist :-)
- rdl 11y agoI hope the taint attains to the company, not to the founders. (I think that's how it works).
- AVTizzle 11y agoHeh, I feel like this is a direct shot at 500: (Fairly so. They seem to offer a blurry line on what they consider "portfolio" sometimes, not going out of their way to differentiate accelerator vs later stage investments) >>(it’s important to distinguish between companies that went through the accelerator and cases where the investment firm made a small late-stage investment in the company)
- _sentient 11y agoAlso a shot at Techstars, who have been known to lump in late-stage fund investments with their accelerator returns. Writing a tiny check into Uber's B-round has nothing to do with their accelerator program, for example, and it's disingenuous when they conflate the two. I should mention that they have been doing a better job distinguishing this lately.
- jedc 11y agoActually, David Cohen wrote a check in Uber's angel round - http://davidgcohen.com/2014/07/14/the-ponys-lucky-horseshoe/ http://davidgcohen.com/2014/07/14/the-ponys-lucky-horseshoe/ And the list of Techstars companies shows only the stats of companies that went through a Techstars accelerator - http://www.techstars.com/companies/ http://www.techstars.com/companies/ Non-accelerator company investments (Uber, Twilio, etc) only appear on the Techstars fund page - http://www.techstars.com/venture-capital-fund/ http://www.techstars.com/venture-capital-fund/ Disclosure - I work for Techstars
- nikcub 11y agoFor those following along at home, that $50k is likely worth around $250M today. Early Uber investors are sitting on one of the largest ever venture returns.
- jedc 11y agoAnd the first Techstars Ventures fund was a $5million fund that invested in angel rounds of Uber, Twilio, SendGrid, GroupMe, and more - http://www.feld.com/archives/2015/01/raise-150-million-vc-fund.html http://www.feld.com/archives/2015/01/raise-150-million-vc-fu... As Brad writes, that fund is "one of the best performing funds I’ve ever invested in". :)
- rachellaw 11y agoIt seems to unfairly penalize startups who've pivoted since after the accelerator. We've been to one. It was early stage, and within our geography. When we spoke to YC/500startups in 2013, it was all about having traction or earning revenue and breaking even. We didn't have that. We were academia dropouts with some patents and an idea. Going through the 1st accelerator helped us because we didn't even know how to put together a pitch deck. We've since pivoted because ideas change, become more focused and polished. Our idea, business model and pitch is completely different. YC would not have accepted us in 2013, someone else did. Now if we want to apply to YC post-pivot, we get penalized? That seems incredibly unfair.
- nostrademons 11y agoWhy not shutter the pre-pivot startup and apply as a fresh startup to YC? If the idea, business model, and pitch are completely different, is it actually the same company?
- jeffwass 11y agoSo you're advocating screwing over the investors from the first accelerator? Especially after they guided the startup to a potentially successful pivot?
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- tptacek 11y agoIt depends on the situation. If your new business plan is encumbered by associations with the previous "pivot" (usually: because you share code with it), then starting fresh is problematic. But if it's not, if the only thing that's the same with the previous pivot is the team, and iff you haven't worked on the new business plan using resources from the previous investors, then "pivoting" gives your previous investors equity in a business they had nothing to do with starting. If you were (a) about to run out of money anyways after giving it an honest shot or (b) returning money back to the investors, there's nothing wrong with dissolving old-co and starting new-co with a clean cap table.
- sharemywin 11y agoCurious if there are other signals you can talk about? Working on the business part-time only because of job? having a young family? Age? Most of SV seems to feel if your over 40 and aren't at least VP of something your mediocre. ambitiousness of the idea versus being able to show progress? How about paying a contractor to do some sales versus finding a co-founder? in this case I'm technical but have a full-time job so don't have the time to talk to customers.
- baldajan 11y agoI do love YC and what they've done to the startup world, but at the risk of sounding like a YC hater, the initial part of the post seems like bad advice (boiled down to: if you want to be in YC don't join another accelerator before hand). The second portion in which to evaluate an accelerator is great advice. But some startup founders may want to get into YC, as it is the best. Yet, they may hesitate to join a strong accelerator that can give them a few more months of runway and advice they desperately need, because of this post. Startup founders may take years to figure out the right direction for the co., as the market size or solution may not be obvious at first. And I feel as though this post, and YCs thinking discourages that and discourages competition. But from what I've seen externally, some startups that go through (a bad) accelerator, don't accelerate, can come out multi-million dollar cos. Based solely on founders persistence on solving the problem.
- sama 11y agoWe're all for companies doing what they need to do to survive. However, we've seen an increasing number of accelerators getting startups to join them by saying "we can help you get into YC", and then subsequently hurting the company with bad advice or onerous terms. Companies should never do an accelerator to help them get into YC. Companies should do an accelerator if they need the money to survive or think that they resources of the accelerator will help them be more successful.
- Outdoorsman 11y agoExactly..
- baldajan 11y agoI 100% agree with that message, but I didn't feel your post conveyed that. My impressions of the post was a broad painting that all other accelerators are bad, even though I know that's not your intent. I think a lesser emphasis on getting into YC and making the post more of "how to judge an accelerator" would have been better.
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- paul 11y agoA simple way of thinking about this is that acceleration only helps if you are pointed in the right direction! One of the common problems with many accelerator programs is that they are run by people who are not themselves experienced founders. Not surprisingly, their advice is often counterproductive.
- pcmaffey 11y agoI'm curious how YC would rate the benefits of the program? My guess (from most to least): 1. Networking 2. Urgency 3. Capital 4. Advice Advice IMO is the least valuable benefit of an accelerator. There's no shortage of advice out there, and founders who take bad advice only have themselves to blame (poor judgement). The negative impact of bad advice IMO is far outweighed by the potential impact of an expanded network, the momentum gained from "rising to the challenge" of an accelerator, and the capital infusion.
- tomasien 11y agoI would guess that you have it in reverse. Best guess would be Advice, Urgency, Capital, and Networking so I guess not strictly reverse.
- tptacek 11y agoFor example...? (I 100% believe you)
- graphene 11y agoyes, it would be really helpful to get some examples of the counterproductive advice.
- paul 11y agoMost common is just wasting their time with low-ROI things such as meeting with a large number of low-value mentors. We try to keep startups focused on talking to customers and building product. A crazy one I remember was telling a pre-product startup that they needed to focus on defining their brand.
- junto 11y ago> A smaller issue is the extra dilution on the cap table Let's be honest here. This is the primary issue not the "smaller issue"? Let's call a spade a spade. Or have I missed the joke?
- WhitneyLand 11y agoI don't see any reason not to take what was said at face value. There's no reason to automatically pass on what seems to be a great opportunity just because you're not first in line. The reason to pass is that the data supports a lower success rate.
- junto 11y agoIt just seems backward to me. I understand that YC are in the business of jump-starting startups with potential. A handful of those startups might succeed. Their entire business model seems to focus on the returns from that small handful of successes. If I were them, my primary reason for taking these companies onboard and helping them to succeed, is purely to see a profit at the end of the line. Hence, dilution is very bad. That would be my primary issue.I just don't understand why it was stated as a minor side point to the whole discussion. Surely it is absolutely important?
- lmm 11y agoThe dilution isn't normally that severe. A 900x return at a 7% success rate would be better than a 1000x return at a 5% success rate.
- taytus 11y agoHummm.... we have customers, we have revenue, we are working with some amazing brands (7-Eleven, pizza hut, Chili's) we have access to more than 500k candidates, we applied to YC and we didn't made even the interview... I'm starting to think that it was because we did participate in other accelerator before, and that doesn't make much sense to me.
- benatkin 11y agoThose brands are big, and had a very strong upward trajectory at one time, but are they amazing? They remind me of sugar water. Especially 7/11. https://signalvnoise.com/posts/2813-do-you-want-to-sell-sugar-water-for https://signalvnoise.com/posts/2813-do-you-want-to-sell-suga...
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- JarvisSong 11y agoYC likely frowns on people like "sales brokers". If you're profitable, consider getting a loan to increase your growth rate.
- ryanjmo 11y agoThe purpose of a sales broker is not to get more money. We have plenty of cashflow. The purpose of a sales broker is get your company in front of perspective buyers, who would have interest in an acquisition of your company and help with the sale.
- puppetmaster3 11y agoI heard over 30 and you are out.
- rl3 11y ago>You don’t need to “prepare” to apply to YC in any way. While you don't need to, I would think the chances of being accepted are considerably better if you are prepared. Especially if you have factors working against you that YC doesn't like. Obviously joining an accelerator prior to YC doesn't count as preparation (more like making your startup radioactive), but it does seem prudent to have a solid YC application while being ready to nail the interviews if it gets that far.
- xcelq 11y agoWhy is this a bad thing even if it were the case?
- conanbatt 11y agoLooks like YC is sending a signal of dominance to other accelerators. Classy.
- nthacker 11y agoAs an unrelated question - what are some of the other well known accelerators, that are at par (or better) than YC?
- tlrobinson 11y agoI'd be curious to see counter examples to this. Is anyone aware of YC companies that previously went through a different accelerator? Even more interesting would be companies that were rejected by YC but went through a different accelerator, either before or after applying to YC.