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Is it just me or does anyone else think that many of the startups from Day 1 and Day 2 are well beyond the "seed" stage that YC claims to target? I get that YC

Is it just me or does anyone else think that many of the startups from Day 1 and Day 2 are well beyond the "seed" stage that YC claims to target? I get that YC is a perfect program to prepare a company for raising significant investment, so it makes perfect sense for the startups to join even at a later stage. Also derisks YCs investment on the standard terms (i.e. 7% of a later-stage company for 120k$ is a better deal than 7% for 120k$ at an entirely unproven company). Example: Ohmygreen claims it's a logistics company (which implies CapEx unless they rent, which eats margins) and already has 800k MRR. Doesn't quite fit my definition of "seed" stage.

tyre 10y ago
This is a good question, and, as a YC founder presenting today, I can give an answer. "Seed" has shifted. In the early days of YC, you came in with an idea and tried to build something people want. Note that it is called "Demo Day", because you would literally demo your product. Today, it's just so much easier to start a company. You can try out an idea in a weekend, so the 3-month program of YC is focused on growth. As you said, they are preparing companies to raise seed capital, and the bar for that has risen considerably.
- sidlls 10y ago
  Surely you're exaggerating. You can create a toy program or even a very basic (most likely web-based application) that solves some problem in a weekend, but there really are very few lucrative companies or ideas that can be accurately "tried out" in a single weekend. If these companies are "seed" stage companies, then I'd argue it isn't that any bar has been raised, but that "seed" has come to mean something entirely different. Any company that has $800k MRR is (well) past seed-stage.
  - confiscate 10y ago
    Yes I have the same question too. The $120k for 7% is meant for seed stage startups where $120k is a Big Deal. If you already have $800k revenue each month, what is the math behind giving up 7% of your company, permanently, for $120k?
    - w1ntermute 10y ago
      You get the YC stamp of approval, which makes selling, recruiting, fundraising (everything, really) much easier. It's like asking why a genius would go to Harvard, when he can just teach himself everything.
      - faceyspacey 10y ago
        exactly. a real genius wouldn't go to harvard. real geniuses don't need "stamps" of approval. fake geniuses do, and not to shit on Y Combinator startups, but these days they aren't that ground breaking. Though now there are more hardware startups, in terms of "app startups," every batch looks the same. The tech isn't that different from what was being done 3-4 years ago. Web app with a panel for a given industry, perhaps a marketplace. Rinse and repeat. That said, it is totally refreshing to see every industry appified, but coding-wise the vast majority aren't pushing the envelope. Let's just not pretend Y Combinator is at the cusp of application innovation like it was several years ago. Another way of putting it is: Y Combinator is more about "businesses" these day than technology.
        vecter 10y ago
        What are you talking about? Real geniuses go to Harvard all the time (or to other elite educational institutions). Y Combinator has always been about business. That's the point of a startup: to build a successful business, not to build useless technology that no one wants.
        kkt262 10y ago
        Not sure your logic is correct here. Real geniuses go to Harvard all the time and they like stamps of approval just like anyone else. Why would a genius not want a stamp of approval? Why would a good company not want a stamp of approval? Leonardo Dicaprio doesn't NEED an academy award but he wants one. Albert Einstein doesn't need to publicize his theorems for the world to gush over how smart he is, but he does it anyway. Genius chess players don't NEED to win competitions, but they want to for the recognition.
        seibelj 10y ago
  - niccolop 10y ago
    I think he's only making the point that it's relatively easy to bash out something that looks like a product, do a release on several online forums and have a 'startup'. It's quite something different to have built a business, that is now ready for hyper-growth; and that's probably where YC can help a great deal. I think seed stage is more loosely defined. Or can you only raise seed capital when you are 2 people hacking in a room on a web app?
EazyC 10y ago
I'm wondering the exact same thing. And also, I am wondering if all these companies that are clearly later than seed stage get the exact same offer of 7% for 120k. Is there somewhere in YC terms that says that is the only deal they offer to new companies, or are we to assume they potentially are recieving more diversified deals?
travoc 10y ago
Risk appetite is diminishing. The shit storm is just over the horizon.
- mkagenius 10y ago
  Too soon. They are doing YC fellowship for a riskier profile.
michaelheinrich 10y ago
Hey guys, I founded ohmygreen and here are my reasons for attending: 1) community of other high quality founders which leads to helpful friendships and discoveries of new ways of thought 2) yc is a forcing function, e.g., experimentation with new business models, focus on growth, etc 3) it makes everything easier (hiring, fundraising, etc) => every little edge helps 4) long term investment: who knows, I might start another company with someone I met at yc or invest in yc companies 5) additional customers we might not have had access to (easy to reach out to any yc company) 6) while we're not quite seed stage, we bootstrapped a couple years and I wanted to scale things faster in order to bring healthy and blissful living to more people We were at a stage where yc wasn't necessary but a very helpful catalyst. I hope this is helpful, happy to answer more.
- zaguios 10y ago
  I think it's clear why you joined YC as it can be very beneficial to any company. The comment is questioning whether YC still remains to be a company focusing on the seed stage of investment. Nowadays it appears that a lot companies that go in have a business already in place and a significant amount of traction. This contrasts with YC's earlier companies in which many of them had only an idea or a prototype with no traction. Whether or not this is true I'm unsure of, but it definitely seems to be the overall perception of what YC has become.
  - michaelheinrich 10y ago
    I agree that there is a trend to accept some more later stage companies. While there are a few post seed companies, there are many in the batch that just started their company right before yc or a few months before, so that is still a theme. With a 100 companies every batch it is easier to have many more diverse companies represented.
- ones_and_zeros 10y ago
  I think it is a no brainer given your reasoning but I think it is fair to say you would have done it without the cash investment. I think this is just a testament to how far yc has come from an incubator taking 7% and giving 20k (or was it even less?) to some unknown hacker types with a paper napkin prototype. YC is more of a "business club" than an incubator from some points of view, I don't blame either side and is probably the reason they are diversifying with various programs to ensure they aren't missing out on the unknown hacker with a paper napkin prototype.

tyre 10y ago

This is a good question, and, as a YC founder presenting today, I can give an answer. "Seed" has shifted. In the early days of YC, you came in with an idea and tried to build something people want. Note that it is called "Demo Day", because you would literally demo your product. Today, it's just so much easier to start a company. You can try out an idea in a weekend, so the 3-month program of YC is focused on growth. As you said, they are preparing companies to raise seed capital, and the bar for that has risen considerably.

sidlls 10y ago
Surely you're exaggerating. You can create a toy program or even a very basic (most likely web-based application) that solves some problem in a weekend, but there really are very few lucrative companies or ideas that can be accurately "tried out" in a single weekend. If these companies are "seed" stage companies, then I'd argue it isn't that any bar has been raised, but that "seed" has come to mean something entirely different. Any company that has $800k MRR is (well) past seed-stage.
- confiscate 10y ago
  Yes I have the same question too. The $120k for 7% is meant for seed stage startups where $120k is a Big Deal. If you already have $800k revenue each month, what is the math behind giving up 7% of your company, permanently, for $120k?
  - w1ntermute 10y ago
    You get the YC stamp of approval, which makes selling, recruiting, fundraising (everything, really) much easier. It's like asking why a genius would go to Harvard, when he can just teach himself everything.
    - faceyspacey 10y ago
      exactly. a real genius wouldn't go to harvard. real geniuses don't need "stamps" of approval. fake geniuses do, and not to shit on Y Combinator startups, but these days they aren't that ground breaking. Though now there are more hardware startups, in terms of "app startups," every batch looks the same. The tech isn't that different from what was being done 3-4 years ago. Web app with a panel for a given industry, perhaps a marketplace. Rinse and repeat. That said, it is totally refreshing to see every industry appified, but coding-wise the vast majority aren't pushing the envelope. Let's just not pretend Y Combinator is at the cusp of application innovation like it was several years ago. Another way of putting it is: Y Combinator is more about "businesses" these day than technology.
      - vecter 10y ago
        What are you talking about? Real geniuses go to Harvard all the time (or to other elite educational institutions). Y Combinator has always been about business. That's the point of a startup: to build a successful business, not to build useless technology that no one wants.
      - kkt262 10y ago
        Not sure your logic is correct here. Real geniuses go to Harvard all the time and they like stamps of approval just like anyone else. Why would a genius not want a stamp of approval? Why would a good company not want a stamp of approval? Leonardo Dicaprio doesn't NEED an academy award but he wants one. Albert Einstein doesn't need to publicize his theorems for the world to gush over how smart he is, but he does it anyway. Genius chess players don't NEED to win competitions, but they want to for the recognition.
      - seibelj 10y ago
- niccolop 10y ago
  I think he's only making the point that it's relatively easy to bash out something that looks like a product, do a release on several online forums and have a 'startup'. It's quite something different to have built a business, that is now ready for hyper-growth; and that's probably where YC can help a great deal. I think seed stage is more loosely defined. Or can you only raise seed capital when you are 2 people hacking in a room on a web app?

EazyC 10y ago

I'm wondering the exact same thing. And also, I am wondering if all these companies that are clearly later than seed stage get the exact same offer of 7% for 120k. Is there somewhere in YC terms that says that is the only deal they offer to new companies, or are we to assume they potentially are recieving more diversified deals?

travoc 10y ago

Risk appetite is diminishing. The shit storm is just over the horizon.

mkagenius 10y ago
Too soon. They are doing YC fellowship for a riskier profile.

michaelheinrich 10y ago

Hey guys, I founded ohmygreen and here are my reasons for attending: 1) community of other high quality founders which leads to helpful friendships and discoveries of new ways of thought 2) yc is a forcing function, e.g., experimentation with new business models, focus on growth, etc 3) it makes everything easier (hiring, fundraising, etc) => every little edge helps 4) long term investment: who knows, I might start another company with someone I met at yc or invest in yc companies 5) additional customers we might not have had access to (easy to reach out to any yc company) 6) while we're not quite seed stage, we bootstrapped a couple years and I wanted to scale things faster in order to bring healthy and blissful living to more people We were at a stage where yc wasn't necessary but a very helpful catalyst. I hope this is helpful, happy to answer more.

zaguios 10y ago
I think it's clear why you joined YC as it can be very beneficial to any company. The comment is questioning whether YC still remains to be a company focusing on the seed stage of investment. Nowadays it appears that a lot companies that go in have a business already in place and a significant amount of traction. This contrasts with YC's earlier companies in which many of them had only an idea or a prototype with no traction. Whether or not this is true I'm unsure of, but it definitely seems to be the overall perception of what YC has become.
- michaelheinrich 10y ago
  I agree that there is a trend to accept some more later stage companies. While there are a few post seed companies, there are many in the batch that just started their company right before yc or a few months before, so that is still a theme. With a 100 companies every batch it is easier to have many more diverse companies represented.
ones_and_zeros 10y ago
I think it is a no brainer given your reasoning but I think it is fair to say you would have done it without the cash investment. I think this is just a testament to how far yc has come from an incubator taking 7% and giving 20k (or was it even less?) to some unknown hacker types with a paper napkin prototype. YC is more of a "business club" than an incubator from some points of view, I don't blame either side and is probably the reason they are diversifying with various programs to ensure they aren't missing out on the unknown hacker with a paper napkin prototype.