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Is Y Combinator worth it?
- varbhat 6y agoGist: Y Combinator is worth it. But, it depends more on you than Y Combinator.
- phenkdo 6y agoIsn't that true for pretty much everything in life?
- WhyCombinat0r 6y agoIf you're selling your ass-ets you better provide. That's the point of Why combinator.
- dimitrios1 6y agoYes. That doesn't change the truth of it.
- CalChris 6y agoY Combinator is worth it. But, it depends more on you than Y Combinator. Isn't that true for pretty much everything in life? Yes, but this is to be contrasted with it not being worth it and that being independent of you. There are many accelerators which would fall into this category.
- mrwnmonm 6y agoI hope if someone can provide some statistics on how many YC companies shutdown after X years. That would be very interesting.
- toomuchtodo 6y agohttps://www.ycdb.co/ https://www.ycdb.co/
- LiamHz 6y agoThis has info (year, exit / dead, one line description) of 1281 YC companies [0] Out of the 49 companies in the S11 batch, 10 exited, 17 are "dead", and 22 have no status. Most of the companies from the W16 batch have no status listed. [0]: https://yclist.com/ https://yclist.com/
- _adamb 6y agoMy guess is that lots of the no-status ones there are chugging along just fine. No exit, no death. I'm part of Tovala (W16) and in our case, no-status means still in business. I can confirm that's the case for a handful of others too. In our case, YC was super valuable. We've never been more focused than when going through the program. They make available so many resources you're desperate to grow and try things so you can get as much as possible out of the program. Even though it has been a while since we were in the bay area for the program, we are still seeing many benefits by the huge and growing network of YC companies. I can't speak for our co-founders but if we could go back in time, we would absolutely take part in the program again.
- closeparen 6y agoAt some point “chugging along” rounds down to “failure” for employees with equity compensation. Particularly at 10 years when it expires.
- benjaminjosephw 6y agoWho would consider building a successful and stable business a failure? Surely not the people that helped build it. Isn't early employee equity compensation more a case of "if the founders make a lot of money from this, I deserve a fraction of that too" rather than being an IOU in place of compensation?
- throwaway2048 6y agoThe people who invested money in it expecting explosive growth at high valuations.
- dheera 6y agoWhen I did YC in S16 I found it worth it, but IMO the biggest value of YC at the time was being able to work on building and selling product for 3 straight months without talking to investors, and knowing that funding was likely not going to be a problem at demo day week assuming you did exactly that. YC had already "vetted" your company for investors so that you didn't need to prove yourself in any other way than hard work/growth. After demo day, you could fundraise in a week or two and then get right back to work. By not talking to investors, you could grow well more than 7%, so it was worth giving up 7%. Of course, YC has a LOT of other value but that was quite possibly the biggest one. Unfortunately with the number of companies in recent batches I feel like that value is no longer captured, not all companies are chased after by investors at Demo Day, and the other value YC used to provide, i.e. individual attention given to companies, is also much less than it used to be. IMO it's still a great program but 7% is too much for what is offered today.
- yancybul 6y agoIf i'm not mistaken, they reduced the 7% to 4%
- ricberw 6y agoYes. You have to keep an open mind coming in though — they may challenge your very understanding of your company’s existence. Focus, focus, focus on the right metric, and find PMF before you scale. S20 participant here, so fresh from the program.
- halfmatthalfcat 6y agoHow was the remote experience?
- 20100thibault 6y agoAlso Interested to hear about it, seems like the distance things kill the networking part...
- s17n 6y agoY Combinator has one of the strongest brands of any investor, which matters a ton for recruiting. It's very hard for engineers considering working at an early stage company to determine whether it's legit or not, and Y Combinator is probably a better known name than any VC. Personally when I was looking for jobs I'd immediately disqualify any company that wasn't backed by a relatively small list of investors and YC was on that list.
- mediaman 6y agoWould you disqualify companies that had bootstrapped successfully, were profitable, and did not take any outside money? Not a judging question - I understand the value of a good investor's due diligence and backing in improving the odds of sane leadership. But it's interesting to think how that can impact a successful, self-funded copmany's access to talent.
- NationalPark 6y agoI think there are so few tech companies that are entirely bootstrapped and profitable that you could probably take the time to specially consider one if they made an offer.
- winphone1974 6y agoThere's way more than you think, b they just don't need to spend time on the PR front building a public persona. They also get the opportunity to take outside money from a position of far greater power for things like paying out strategic early employees vs.v keeping the lights on. I've been involved with 2 companies that took private equity instead of IPOs because of the operational changes that a public listing entails. It takes longer to grow to this point, but the deals were substantially easier and quicker.
- NationalPark 6y agoCould you share some examples? Every unicorn I can think of took some VC funding. But maybe I'm missing some niche SaaS type companies?
- dustingetz 6y ago> If your company is really successful, you may find yourself in a position where you need to negotiate some of those pro-rata rights in order to make the round work (i.e., make enough room to accomodate new new investor demand). ... early seed-stage commitment may upset other investors. Other angel/seed/Series A investors can become unhappy when having to live on a cap table alongside YC. What's this about?
- amacneil 6y agoYC takes 7%. Lead seed investor wants to take 15-20% to make it worth their while. Lead series A investor wants to take 15-20% to make it worth their while. Other investors and option pools each round increase dilution further. Founder doesn't want to give up 50-60% of company by their series A, so because they gave YC 7% they must either convince the lead investors to take a smaller percentage, or convince YC or seed investors to drop their pro rata rights. Of course, you could argue that the company wouldn't have seed or series A investment had they not joined YC, so in that sense it's a nice problem to have.
- deleted 6y ago[deleted]
- drodio 6y agoYep.
- cvaidya1986 6y agoYes for the advice, network with founders/investors/smart people and product focus.
- icinnamon 6y agoYes— I was lucky to be in the W14 batch. YC will get you access to great investors, help you get better terms, think through business decisions, offer a great network, etc, but to be honest many of those things can be had through other accelerators/incubators/investors/schools/programs. What’s truly unique about YC is the mindset and environment you’re in during your time there. If you’re open to embracing the experience, it’s absolutely worth it. Having a tight-knit group of fellow founders to push and encourage you through a hyper intense 3 month period leads you to accomplishing some amazing things. Things that you may not have thought were possible or pulled off otherwise. Of course you get a crash course in entrepreneurship and a great network, but I’d argue you also learn a ton about yourself, about leading, about how to truly focus on the right problem, and what you’re capable of. Absolutely worth it. Always happy to chat with people if they’re uncertain.
- ausjke 6y agoIMHO not worth it. Moving to CA kills it for me, if it has more small centers like other incubators I might give it a try locally. $125K for 7% is a lot, for companies think that's a good deal, normally means that company has limited chance to succeed in the first place. Still the location requirement is the one many can't afford,especially those who got married and/or have kids, had industrial experience and probably more likely to fly. Plus, CA's booming time might be over, COVID-19 speeds up the trend.
- langitbiru 6y agoYC is remote for the time being. Not sure in the future. https://blog.ycombinator.com/yc-w21-remote-batch/ https://blog.ycombinator.com/yc-w21-remote-batch/
- marcinzm 6y ago>$125K for 7% is a lot, for companies think that's a good deal, normally means that company has limited chance to succeed in the first place. Or they believe that the YC brand will raise their value more than 7% which is quiet possible.
- tmilard 6y ago100k$ or 135k$ is for me a nice cash: It gives you freedom to be 130% of your time for the project and have a budget for other things. Looks good to me .
- eeZah7Ux 6y agoNo
- testplzignore 6y agoIf Betteridge's law of headlines is correct, then the answer is no.
- deleted 6y ago[deleted]
- taytus 6y agoI think it is worth it but less every year. I got an email to apply (we got rejected in the past) and I just ignored it. We raised our seed round, in the middle of Texas... there is a lot of capital out there and a lot of amazing investors. The world is much larger than SV.
- newera2016 6y agocongrats
- taytus 6y agoThank you!
- bulutsuzku 6y agoThis YC thing is only for US companies right?
- haolez 6y agoWhat's the cost? I think it's something like 7% of your company upfront, right?
- bluehatbrit 6y agoYes, that's at the bottom of the article: > YC has a "standard deal" where they take a 7% stake in your company. YC also gets pro-rata rights in future funding rounds.
- deleted 6y ago[deleted]
- gabereiser 6y agoLet’s use another analogy here: YC makes F1 race cars, some of the best in the world. Proven time and time again to be fast. You, the driver, need to be able to handle it in order to achieve optimal results. Accelerator X makes race cars too, but a different class - possibly even a different style all together. Again, as the driver, you need to be able to handle it for optimal results. Question is, what, as a driver, is your motivation? Is it to go as fast as you can? Or is it the thrill of the race? Or do you really just want a kit car you can work on yourself? This is one of many analogies I use to describe Accelerators/Incubators/Startup Camps. YC is no different. What they have though is a long history of building successful (and not so successful) companies. You can do it elsewhere. You can go through a program locally or something and you may end up just fine. Business, like all things, is a risk. Your first test as a leader is mitigating the risk of “How do I start?” which is a big one. I’ve tried a few times to start. Still looking for my pit chief.
- julianlam 6y agoThat's a very good analogy! While reading the article, it struck me how fast-paced YC was, and how that is not at all like how I want to develop my software. I'm all about low pressure organic development of my business. But man, what I'd give to be a fly on the wall at that YC dinner with the founder of Lithium...
- gabereiser 6y agoTotally. It depends on what you are building. Myself, I gravitated towards games and engine tech. Stuff that requires study, and thinking, and mathematical advancements. It’s not something that was “Oh, there’s a void in the market here, let’s fill it with an intensely focused product from our program.” But, again, I like working on kit cars...
- joncrane 6y ago>Still looking for my pit chief. Do you mean crew chief? That's what they're called in NASCAR. I think they are called race engineers in F1.
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- mathattack 6y agoMy inclination is that for most 1st Time founders, the 7% in dilution you give up is immediately gained back with a better valuation in the subsequent round. There are also other benefits to the Halo - recruiting, credibility with customers, peer network, etc. And.... You may learn something.
- drodio 6y agoI’m a 4th time founder (but first through YC) and also found it to be very valuable. We spent too much time coding behind closed doors in previous startups.
- doh 6y agoYC is a fantastic shortcut to the Bay Area market. They protect you from abusive investors, attract talent and entice new customers. Farther you are from the Bay Area, less helpful they are though. Even in the Bay you can do it all by yourself, but it's much more complicated route filled with negative experiences. At least that's my experience. The way we were treated by highly celebrated investors was hard to swallow. Anytime I spoke to a YC alumni friend they have striking, opposite experience. With companies mostly operating remotely, I think the value is now dropping, but is far from non-existent, especially for new founders. It's like a university degree. You can have equal or larger knowledge if you put the work into it.
- zapita 6y agoEven if you operate far from the Bay Area, you might still want to raise money there. In which case YC is extremely valuable, especially for outsiders.
- doh 6y agoThat's a good point. Essentially YC is a guard dog for the Bay Area. If you want to get in, then there is no better organization to help you out, keep the deals clean and founder abuse low.
- langitbiru 6y ago"abusive investors" -> Tell me more about them.
- deleted 6y ago[deleted]
- gogopuppygogo 6y agoEver been threatened with a lawsuit by an Angel with full time counsel at their disposal because you haven’t hit revenue targets in year one? Ever had that investor write up a pedantic missive about your startup to mock their own investment? Hostile investors are real and awful. Shielding startups from toxic money is a thing.
- deleted 6y ago[deleted]
- SpeckOfDust 6y agoSlightly different question. Is Y Combinator still worth it in its fully remote format? Didn't they themselves said they couldn't deliver their value remotely a couple of years back?
- langitbiru 6y agoCovid-19 changed many people's mind. I mean, big companies like FB / Google didn't believe remote works in the past. Then, they accommodate remote workers now.
- SpeckOfDust 6y agoTrue. None of the bigtech companies ever took a hard stand against it though. Some people were always working remotely in some capacity in these companies. I'm curious if there are people who've done YC in both remote and non-remote format. Would be interesting to hear their comparisons.
- nanomonkey 6y agoI'm curious how this question plays out for the non-profit and b-corp sector of Y Combinator participants. The hyper focus on profit, network effects and growth mindset often seems at conflict with a purpose driven group. Are there a different set of metrics and wisdom for the non-profit to focused on? Are they grouped with the investment driven companies, or treated separately? As someone working on a platform co-op I've experienced a lot of blank stares and confusion when describing the open source aspects of my system's design and the benefits it gives to the users. Not having the normal latches in to capturing the user's revenue streams seems counter to what would be expected by the mentors in YC. Anyone know how this plays out?
- mikekij 6y agoYes. I was fortunate to be in YC W19. It was transformational for our company. Should I be fortunate enough to start another company, I would do it again, even though I now have access to the YC network of investors. I can't recommend it enough.
- crsv 6y agoI think if you’re young, don’t have an established family and don’t have any real experience as a founder then YC is something that will be an incredible benefit to you on many levels. Once you’re outside of those demographics, the value falls off dramatically IMO.
- drodio 6y agoI sold my last company https://drodio.com/socialize-was-acquired-by-sharethis-heres-what-the-experience-was-like/ https://drodio.com/socialize-was-acquired-by-sharethis-heres... and Armory was my 4th startup. I also probably don’t qualify as “young” having been doing startups since 2000. I found YC to be extremely valuable for all the reasons I shared. A side story: After I sold my last company in 2013, I met a guy (who worked at the acquiring company) that had big startup ambitions. We were on a bike ride one day (probably around 2015) and I told him I was going to apply to YC the following year to do a startup. He scoffed, and said the same things as you above — “YC is for young founders w/o experience.” He said he, too, was going to do a startup, but not apply to YC. Fast forward five years. Armory is growing very fast. My buddy is unemployed after spending $350k of his own money attempting his startup. Was YC the difference? Impossible to say. But I know my story is true, and I’m thankful for the intense focus YC provided — even for a startup veteran like me, with a successful exit, who didn’t necessarily think he needed it.
- samblr 6y agoLet's compare seed valuations & dilutions of : a YC company vs Non YC Company YC : takes 7% for 125K and then let's say you raise $1m at $12m post money. Total diluted 15%. Non YC : If you want to raise $1m for same 15% dilution - your post money would be $6.5m. So these are pure numbers[1] With YC, I guess Founders' gain a network, bay area connections etc [1] : https://docs.google.com/spreadsheets/d/1kxOBF0CPhcktmgFvAZtYJVHrlf-hMw7nsw8S56dmt1A https://docs.google.com/spreadsheets/d/1kxOBF0CPhcktmgFvAZtY...
- aerosmile 6y agoHighly underrated comment. A lot of people are approaching this topic from a philosophical point of view, which tells me that they haven't gone through YC's Demo Day and don't understand how it's different from other incubators' Demo Days. It's very different - there is an entire cottage industry of YC-only or YC-preferred funds built around this event, and if you play your cards correctly, those funds will be fighting to get onto your cap table. I do know that there are investors all over the world, but investors don't behave like this anywhere else.
- kirillzubovsky 6y agoAlthough definitely very helpful to YC folks (YCS12 here), I do find it kind of funny that YC-preferred funds have emerged, since they introduce the same biases YC was meant to remove. It's a natural process, and there is no such thing as not being biased (as it is a bias in itself), but the signaling of being part of YC is definitely huge, especially first time, and for outside of the Bay. Investors are people too.
- pedalpete 6y agoCan you enlighten as to the assumption that the YC backed startup has a $12m post and non-yc has a $6.5m post?
- samblr 6y ago:) Angel list had a page where one could find out the valuation based on various filters. Unable to find that now. However, many YC companies fail to raise in demo day! And there are non-yc companies who 've gone to raise $3m-$5m in seed alone with just a deck. The latter had the advantage of proven track records etc. Also, the higer valuations at seed stage can come back to hurt in Series-A.
- ArtWomb 6y agoI think the "magic" of YC is that it attracts "genuine hackers". People with technical wizardry, who don't readily fit in traditional academic or industry roles (though they typically create tremendous results in those arenas). What's surprising is how uniformly distributed that talent is throughout the world. My main feedback from YC SUS was that there should be a second course. The first semester is about everything around the product: ideation, corp formation, staffing up, etc. But there shuld be a dedicated semester just on product design. Perhaps modeled on the Stanford D.School product design course. With a library of case studies from past YC companies. As well as a practical component, akin to the YC SUS Design Sprints. Product in this sense isn't just about say "creating a new podcast". It's a deep dive into "how was the iPod born". And how that in turn gave rise to the entire podcast industry ;)
- radley 6y ago> kind of like asking "is exercise worth it?" Actually, it's more like "do I need a trainer?" If you already have a routine and it's working for you, then no. But if you've never exercised or exercise and are getting nowhere, then it's a huge boost to learn how to do things right and achieve your goals faster (with a high but worth-it price).
- phjesusthatguy3 6y agoActually it's more like "is this one particular trainer better than anyone else?"
- ausbah 6y agoeven those who are experienced with exercise can always learn something!
- newera2016 6y agoWe built our $100mm startup after getting rejecting in YC interview back in 2014. Even since than I am actively involved in YC. We submitted our new startup's application this fall. Lets hope they hear us this time.
- drodio 6y agoWhat’s it called? I’ll recommend you, if you previously built a $100MM company. Email me or DM me on Twitter.
- asou 6y agoDoes anyone know if Y Combinator provides good feedback when sending out rejections . The best way to learn anything is to try , but I want more than ' Better luck next year'
- nirmel 6y agoThey don't provide feedback if you don't get an interview. If you do get an interview and are rejected, usually, they provide feedback.
- phjesusthatguy3 6y agohttps://www.ycombinator.com/topcompanies https://www.ycombinator.com/topcompanies has: 2 legitimate hits (stripe, dropbox) ? WTFs? (Cruise, Ginkobioworks,Flexport,Rappi,Brex) ? losers (AirBNB,Doordash,Coinbase,Instacart,Gusto, Reddit) I started writing this list up but can't bring myself to finish it because it's so bad. On the one hand, yes you should apply because people with money will give you some of it. On the other hand, they're not going to help you be successful; you have to do that yourself. YC doesn't seem to have any special insight into how to make your company successful. And they don't seem to be able to pick winners any better than anyone else. I'd suggest going in with bright lines that you don't want to cross. Let YC tell you what they are willing to give you money for, and don't budge from your principles.
- deleted 6y ago[deleted]
- thursday0987 6y agowhy do you consider AirBNB, Doordash, Coinbase, Instacart, Gusto, and Reddit as losers? All of those are very successful in my eyes.
- nghiapham 6y agoThank you for sharing.
- josh_carterPDX 6y agoYou could ask the same question for virtually ANY accelerator program out there. And at the end of the day the answer is, "it depends." Every founder and every company is different. If you are a first time founder and your network is limited then these programs open a network you could never penetrate on your own. For seasoned founders these programs help to connect you with resources as if you had additional team members meaning (if you took advantage of it in the right way) you could easily scale your business quickly. If you are a founder who is sensitive to your early valuation then an accelerator may not make sense. Every founder needs to sit down and collect as much input as they can to make the most informative decision to help grow their business.