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Taking part in Y Combinator from Europe: is it worth it?
- ro-_-b 5y agoWhat I don't understand is why they complain about the high costs of setting up a business in the US (tens of thousands of dollars). Shouldn't this be pretty cheap with Stripe Atlas?
- gootler 5y agoNope.
- devops000 5y agoI don't think is worth it to give up 7% if your business has some revenue, and it's growing. If you haven't reached market-fit yet, then a mentorship could be useful if you don't have such skills in your networks.
- melomal 5y agoIf it has revenue and is growing then I would look to get a loan to double down on what is working. Pay back the loan whilst increasing revenue and keep the entire company to yourself/team. The additional revenue can offset the expenses which were taken care of by the loan.
- 0xfaded 5y agoBy which time an American company will have copied your business model and plow 10x anything you could ever dream of raising in Europe into dominating your market.
- igammarays 5y agoMore VC money is NOT always better. Instagram, WhatsApp, and other unicorns were built with extremely small teams. Latest case in point: Mailchimp, built with 0 VC funding.
- goohle 5y agoYep, lot of investor money can contribute to bankruptcy: WeWork, Katerra, etc.: https://www.bloomberg.com/opinion/articles/2021-06-08/katerra-bankruptcy-how-softbank-s-american-house-of-cards-collapsed https://www.bloomberg.com/opinion/articles/2021-06-08/katerr...
- pedalpete 5y agoInstagram had raised over $57M in VC funding before being acquired. https://en.wikipedia.org/wiki/Timeline_of_Instagram#:~:text=Instagram%20has%20raised%20US%247,Instagram%20at%20around%20%2425%20million.&text=Instagram%20hits%205%20million%20monthly%20active%20users https://en.wikipedia.org/wiki/Timeline_of_Instagram#:~:text=....
- deleted 5y ago[deleted]
- long_time_gone 5y agoAre there examples of this phenomenon? If so, please share.
- andy_ppp 5y agoYes, I’d like to see some examples of this, I’ve never heard of the fast follow working but happy to be corrected. The thing is they will not have access to your metrics to know the rate of growth and as we all know most amazing startups look like bad ideas on the surface. Take for example something like Substack - it should be easy to copy but they already have a moat in terms of mindshare with writers so I’d say there isn’t much point. Basically by the time you’re thinking about copying something that has product market fit it’s already too late for you to be the incumbent.
- andy_ppp 5y agoI always just think about the investors you get access to if you do YC, and the network of people. I think if you are on an exponential growth curve but want the YC experience I think it would be worth discussing that 7%, I believe it's not set in stone and exceptions can be made. Why wouldn't YC want a smaller percentage of something that was clearly already going to be huge... And as for the 7% I'd say you might get that back with more funding for less equity if you're already one of the larger companies by demo day, lots of investors will throw money at you.
- rjzzleep 5y agoI think it's worth looking at the leaked emails from when Google acquired YT. They didn't acquire it because they thought their tech was great or that they had a great product. They acquired it because a) the team was local and b) because sequoia invested in it. https://twitter.com/TechEmails/status/1433837480449613839 https://twitter.com/TechEmails/status/1433837480449613839
- dang 5y agoDiscussed here: Larry Page: “I think we should look into acquiring YouTube” (2005) - https://news.ycombinator.com/item?id=28424339 https://news.ycombinator.com/item?id=28424339 - Sept 2021 (245 comments) FWIW I think their reasoning must have changed drastically in the year between those initial emails and when they actually acquired Youtube. The emails suggest $10-15M as a price. They ended up paying $1.65B, which shocked everyone at the time (and now seems small). The difference is that in that year, YT grew exponentially. So this is actually an example of a high-growth win; indeed it's one of the classic examples. This sequence of tweets kind of confirms that: https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/JGamblin/status/1433847336459964420 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/jhuber/status/1433863045613174784 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/JGamblin/status/1433865429932462083 https://twitter.com/jhuber/status/1433866494752935938 https://twitter.com/jhuber/status/1433866494752935938 (the last one is the important one but the sequence is amusing)
- redis_mlc 5y ago
- dominik-2020 5y agoI think it's more complex than that. I would recommend everyone to join YC. It helps with customers and investors. Most likely your company valuation will go up more than you'd need to compensate for the 7%.
- jsonne 5y agoGiving up that 7% functionally doubles the valuation you can justify at a seed stage and saves you months in fundraising efforts. That time is valuable and if you plan to raise a lot having a low dilution matters quite a bit.
- robocat 5y agoIf the effects of joining YCombinator increases your final valuation by more than 7%, then on a purely financial basis you should join YC because even though you have given them 7%, you end up more wealthy than you would have. Ignoring dilution. Obviously there are a variety of caveats, such as voting issues and time investment. Personally, I suspect most founders are at a negotiating disadvantage (knowledge, power and bargaining asymmetries), and think it would be easy to get an extra 7% by having YC on your side of the table. Also see https://www.ycombinator.com/deal/ https://www.ycombinator.com/deal/ for details.
- ironmagma 5y ago> Bookface is YC’s knowledge base, and it answers 80% of the questions a founder can have about building and selling a product, be it to clients, candidates or investors. It’s the most valuable content I’ve ever read. Something tells me this information isn’t so scientifically based and cited as it could be. I wonder just how much of this contributes to the business monoculture we see today.
- polote 5y agoWhen you are accepted at YC you are already a team which is autonomous and capable. With or without Bookface information things will not change much. Maybe you can save an afternoon because the information is easier to access and already curated. But nothing life changing for sure. What really is important is connection to other people, when you are starting a B2B saas companies for example the people you are talking with on BookFace, are all potential customers, and can make your first customers easier to find.
- edouard-harris 5y agoThe advice on Bookface certainly isn't scientifically based in the strict sense of having been compiled through double-blinded, controlled studies. But the writer and publisher of this content (the YC team) has both 1) intimate access to the largest single dataset of startups that has ever existed; and 2) an extraordinarily strong financial incentive to give consistently excellent advice to its portfolio companies. That doesn't mean their advice is always right, but it does mean they have both the capability to quickly discover when they're wrong, and a powerful motivation to quickly correct their mistakes. So at any given time, we should expect the advice YC gives its portfolio companies to be pretty good. Given that, it's worth considering whether what's perceived as "business monoculture" might actually be better described as "set of business practices that have been shown to actually work pretty well in the real world".
- sfink 5y agoFrom what I've seen, YC will always advise going for a high-growth, high-risk strategy, and their advice and knowledge base will always push in that direction because that's what is best for YC. That might be what's best for a given founder or company, but it may very well might not be. You will have to be proactive and assertive in what works for you to avoid being bullied into the standard YC/Silicon Valley gamblers' playground point of view.
- tluyben2 5y agoI did Antler in the EU recently: going in pretty much thinking it would not be beneficial, but it was. So going to say yes: for the mentoring and contacts it will be, even if you already have a bunch of startups under your belt.
- the-dude 5y agoDid you get funded? Can I contact you? ( you are Dutch right? )
- nkotov 5y agoLove this article. I had a chance to go through YC S20 and it's been life changing for me. As someone who lives in a non-target city (Charlotte, NC) and with no connections to SV and not having a fancy degree, getting into YC opened so many doors for me. As a first-time founder, the 7% that YC takes seems like almost nothing when in return you get access to very valuable information and network. If I was to start a new company again, I'd still apply for YC again.
- aerosmile 5y agoThe challenge of a random company posting about their experience at YC is the same as what you'll hear about HBS - it's always anecdotal and tied to the personal outcome of the writer. Are there people who spend a shit ton on HBS and don't return that investment soon enough? Sure. Would it make sense to go to HBS? Depending on where you net out, it can be the best or the worst investment you've ever made. The nice thing about YC is that you're not investing your cash, but equity. If you have the right business/team/timing/execution, then the cost of equity will be high, but you'll do better than you ever expected so it's all good. And if you don't do well, then your equity wasn't worth much to start with, and you essentially got the HBS experience for free without any of the debt.
- samb1729 5y agoBy HBS do you mean Harvard Business School?
- aerosmile 5y agoYep
- Apofis 5y agoI don't think you can lose with HBS. If you want to talk scaling and on speak eye to eye with VC's and don't think entrepreneurship is a lottery, then a business school always makes sense. This comes with a but... BUT only if you plan to lead or scale your enterprise. It's only what I see from the outside so far, since I'm just getting ready to dip my toes. Ideas are ideas, everyone has one, like a netherhole. The ability to execute is the determining factor.
- probably_wrong 5y ago> Hundreds of pages of paperwork to register the company in the US This called my attention, as I imagine that a US-registered company with European founders would be a headache. Is this a requirement for YC companies? If so, could someone explain why? I can imagine several plausible reasons, but I'd like to know what the official one is.
- motives 5y agoIts so investors can leverage the massive tax breaks available when investing in US based startups. Hence why YC also lets you found in tax havens like the Cayman Islands. Note this is probably not the official reason, as it's generally frowned upon internationally to encourage tax avoidance.
- sgrove 5y agoThe simpler, less cynical answer is that it's not just a US-based company, it has to be a Delaware-based company. This is because all of the laws around founding, investing, selling, etc. a company are extremely well-trodden in Delaware, and there are very few question marks as to how some strange eventuality or disagreement might be handled. Since startups are already incredibly difficult, this is a way of normalizing away some of the weird situations that could cause a startup to fail (and likely would never cause them to succeed), so that everyone is putting energy into the real unknown unknowns around the startup.
- motives 5y agoMy take is indeed probably more cynical and you're very correct about Delaware being well-trodden, but it does raise the question why the FAQs mention a bunch of well known corporate tax havens [0](Cayman Islands and Singapore) and not other well-trodden territories such as the UK, which has a really straightforward and efficient ecosystem surrounding startup law and incorporation (SeedLegals etc.) and plenty of history to extrapolate from. Also the FAQs mention nothing about having to be in Delaware, perhaps they should be updated? [0] - https://www.ycombinator.com/faq#q25 https://www.ycombinator.com/faq#q25
- jjj3j3j3j3 5y agoRun away from Europe! It has no future. The place is too socialistic, that means lazy people will live taking money from the others. There is already an army of non-working people who gets social benefits for years or decades. The downfall of the EU is inevitable just like the downfall of the soviet union was inevitable. It is a construct that cannot exists for a prolonged period of time and will collapse some day.
- dustingetz 5y agoHere's a hot take, not sure if it's right: YC's 7% is the difference between founders vs VCs having control after two rounds assuming good growth. The issue is that the best startups like early stage MS Amazon Google Facebook don't need help attracting access and information. The 90% failed startups get the merit badge which will help you in your future career as a non-founder. And then there's good startups like Roam, which YC is not smart enough to detect. What's left is controversials like Airbnb, which never exists without YC. Are you Airbnb? And is YC smart enough to see that?
- aerosmile 5y agoI would group this together with two other statements I heard that seem logical on the surface but ignore the reality of the market: "Why raise a seed round of more than $1.3M? If I can't build a business with 1.3M, then it's not a business worth building!" "What's the problem with [name of a top tier VC fund] being in my seed round? If they actually choose not to do our A round, then it's not a good business to start with!" The problem with all these statements is that you're looking at this from an overly idealized perspective where things always happen for a reason and there are no oh-shit moments. But the real world is messy and sometimes not rational. Perhaps your VC won't take your A simply because they already did two As that same year, and they are stretched beyond their limits. And perhaps your bigger competitor will sue you and suddenly your $1.3M will no longer be enough (at that point it's too late to raise again). So going back to your original statement "best startups don't need help attracting access and information" - so you're saying best startups always go from bootstrapped to a high valuation A without any seed checks in between? I mean, even Google took a bunch of seed checks, and it doesn't get more disruptive than two Stanford PhDs building a better search engine with patented IP. By the time all those seed checks, lower-than-otherwise valuation, and various not-super-clean deal terms (was Eric Schmidt really necessary and how much did he cost in cash and equity?) are factored in, the YC route turns out to be net positive even for the best startups with first-time founders. The only exception might be a serial founder with a prior exit and strong VC connections, eg Max Levchin.
- officialchicken 5y agoEverything is becoming more remote friendly, YC isn't fighting against that trend. And their track record and prestige speaks for itself. "It's not what you know but who you know". But why ask that question on this site? Do you honestly believe someone will say 'No', give credible information, and not be down-voted or shouted over to oblivion?
- black_13 5y agoTaking part in y combinator is it worth it.