11 ms·

80k may be a little tight for international founders, as flights and legal fees for visas can be very expensive. Also silly things like paying extra for deposit

by dmmalam 14y ago

80k may be a little tight for international founders, as flights and legal fees for visas can be very expensive. Also silly things like paying extra for deposits on rent/bills as you have no US credit history. But otherwise seems reasonable.

rdl 14y ago
80k also substantially complicates hardware, I think. I wouldn't do a $50k hardware build without $100k in the bank.
- ibdknox 14y ago
  It seems like the smart thing to do in this case is to then go down the Kickstarter route. I definitely wouldn't suggest it for software, as I genuinely think we got extraordinarily lucky, but for hardware it's an excellent choice.
  - rdl 14y ago
    Yeah. Getting early revenue or at least commits is key for anyone. That said, I think I'd still want to have a bigger bank doing hardware. If you kickstart or take pre-delivery payment for something at ~cost, and you need to respin a few times, you may become the next Wakemake. Being able to just take your $50k reserve fund and buy all new parts or pay for an expedited mold or something could make a big difference early on. I wish I had enough silicon-valley-version-of-Wasta to raise a $2-5mm microfund. Being able to finance hardware projects or other obviously capital-intensive YC projects on START terms with an extra $100-200k early on would be a pretty decent investment. It would still be a much more algorithmic decision than "which teams do I think will win", which probably wouldn't work as well. The ideal LP for this would be Jeff Bezos and maybe a few other guys who made bank off hardware or retail. You'd almost be a bank, vs. an investor -- you would be investing based on a specific credible expenditure. Do it as debt + warrant coverage, or secure against revenue. Just be easy about it -- it should take 5 minutes to make a decision, and you should be adding hardware/distribution/retail/logistics clue to the process to help the founders. YC hardware companies (and, honestly, all startup hardware companies) kind of sucked before the $150k START in W11.
- notaddicted 14y ago
  I don't think that taking this money precludes founders from raising more money if they need it, as they would have needed to do two years ago before the Start Fund.
  - rdl 14y ago
    The problem is raising money during the 3mo YC program is difficult and discouraged. YC founders have said they are discouraged from raising money until Demo Day or beyond, so they can focus on building stuff. In very few cases will $80k vs. $150k make a difference before Demo Day, except for (IMO) hardware, certain other businesses with specific prepayments (maybe a licensing deal like "exclusive 12mo license for Kinect tech for pharmaceutical industry"), etc. But really hardware is the only obvious case.
    - ibdknox 14y ago
      I would actually go further and say it's not just difficult, I imagine it would be near fatal unless you were a well established company walking in. We found fundraising to be an incredibly soul sucking process and without at least a firm grip and a solid plan for what you're doing you wouldn't make it far. While not nearly as bad as fundraising itself, I would also caution people not to underestimate how much work a successful kickstarter is. A lot of work is required, and is continued to be required long after it has finished.
w1ntermute 14y ago
$80k would also be hard to do in SF for Americans. I think YC should do something around the Google Fiber initiative in KC - there's already a startup community congealing around the fiberhoods that have already gone live, and you can make it at least 1.5 to 2 years in KC on $80k, given the ridiculously low cost of living compared to SF.
- philwelch 14y ago
  But then you'd have to live in Kansas City, not the Bay Area, where all the investors and talent are. There are many parts of the Bay Area less expensive than SF proper.
  - w1ntermute 14y ago
    That's why I'm saying that YC should take the first step, since it has the power to make a startup community in KC a real thing. I also think that having the entire tech community concentrated in the Bay Area is a bad thing. It leads to mental inbreeding and a narrow perspective.
    - philwelch 14y ago
      What's the benefit to YC?
      - w1ntermute 14y ago
        As I said, concentrating the community in the Bay Area leads to mental inbreeding and a narrow perspective. Funding Midwestern startups might lead to successes that couldn't have been achieved in the Bay Area. Also, such startups could be funded with less money and will have a longer runway.
        prostoalex 14y ago
        Why would it be less money? For software startups human capital gets to be the most expensive. Unless KC has a rather large community of brilliant senior engineers, who also happen to be unemployed, you'd have to offer something significant to convince people to move there and pay their (and families') relocation. Bay Area inbreeding partially works because (a) young companies don't have to spend as much on relocation, (b) availability of public transportation makes living and working in different cities plausible.
bsims 14y ago
Can I use this quote? Working on a company built around supplementing credit information to solve this problem. Would be curious to hear an international perspective on this.
pclark 14y ago
$150K is not enough to secure H1B visas either.
- ajju 14y ago
  Yup, the first thing I thought when I read this: I hope this doesn't end up hurting non-resident applicants to YC. The "prevailing wages" for an engineering position (the minimum salary the company can pay an engineer on a H1B visa) in CA are about $75K. This means that there is almost no leeway even if only one of the founders needs an H1B: this funding alone would not cover it. YC is very aware and supportive of immigrant entrepreneurs though, so I am sure they are already thinking about this. Two mitigating facts: - It is prudent to have enough money in the bank to pay the H1B employee for a year, but this is not a requirement before filing for an H1B, especially if you can show that there are other ways the company can continue to pay the employee. Most significantly: revenue :) - The H1B is not the only route available to non-resident entrepreneurs: the O1 visa is another option, although the requirements are more stringent. I have had to cross a few of these bridges myself, so if I can be of help to anyone reading this, please email me: hnusername@domainINprofile.com
  - 001sky 14y ago
    Question - do you need the $75k lump sum, or just the pro-rata per month? its only ~6k/month salary per fte, of course depending on the runway...
    - ajju 14y ago
      The company has to prove that it will be able to pay the employee's salary for the duration of the visa. A lump sum in the bank is the easiest way of doing this. A steady or growing revenue stream per month is another way.
- dogan 14y ago
  it is
- deleted 14y ago
  [deleted]
qiqing 14y ago
You can also stay with Chez JJ, which has no such requirement. We've hosted over 20 YC companies in the past year, many of them international, and we also help with orientation to the Bay Area.
ricardobeat 14y ago
YC gives a measly $600 for travelling expenses for the interviews, but suddenly $80k isn't enough? $4k gets you anywhere in the world, and maybe half the western world is reachable with $1k or less. You're not going to spend a substantial portion of $80k on flights unless you go home and back every weekend.
- onetwothreefour 14y ago
  You don't know what you're talking about. Immigration costs close to $10-15K if it's a real move. Without a US credit history, you're going to have to put down a lot of deposits just to get basic things done like getting a credit card.
  - ricardobeat 14y ago
    Maybe I don't. But what about founders before 2010? There are plenty of companies that succeed without being based in the US. Is spending almost 20% of your business runway on immigration worth it?
- dmmalam 14y ago
  Visas cost 5-10k per founder. We had to pay an extra month of rent as 'deposit'. You will need to fly in and out of the US several times while the visas get process, as the ESTA is only 3 months. A round trip from LON-SF can be 1k per person, and that's from a hub. I've already got enough miles to be bumped up on my frequent flyer prog. It's not the end of the world, and the typical YC company will be resilient enough to survive whatever. However it does add up fast (40k easily), it's not something you can avoid, like say buy a less shiny laptop, and reduces your runway in a meaningful way.
  - nikcub 14y ago
    Use visa waivers. They let you stay in the US for 3 months at a time and spending $1k on a ticket at the end of each 3 months is cheaper than paying $5-10k upfront for a visa plus additional flights. If you are worried about the number of times you can enter on a visa waiver, don't - I have entered the USA 50+ times on a waiver and the guys at immigration ask me how I am going and wave me on each time. This was even more fun before they closed 'The Mexican Loophole', where you could drop out to Mexico for the weekend and get a new visa on the way in. I had a lot of fun weekends in Mexico before they shut that down. You now need to leave the North American continent (they included Central America when people started flying to Belize to get new US entry visa's)

by dmmalam 14y ago

rdl 14y ago

80k also substantially complicates hardware, I think. I wouldn't do a $50k hardware build without $100k in the bank.

ibdknox 14y ago
It seems like the smart thing to do in this case is to then go down the Kickstarter route. I definitely wouldn't suggest it for software, as I genuinely think we got extraordinarily lucky, but for hardware it's an excellent choice.
- rdl 14y ago
  Yeah. Getting early revenue or at least commits is key for anyone. That said, I think I'd still want to have a bigger bank doing hardware. If you kickstart or take pre-delivery payment for something at ~cost, and you need to respin a few times, you may become the next Wakemake. Being able to just take your $50k reserve fund and buy all new parts or pay for an expedited mold or something could make a big difference early on. I wish I had enough silicon-valley-version-of-Wasta to raise a $2-5mm microfund. Being able to finance hardware projects or other obviously capital-intensive YC projects on START terms with an extra $100-200k early on would be a pretty decent investment. It would still be a much more algorithmic decision than "which teams do I think will win", which probably wouldn't work as well. The ideal LP for this would be Jeff Bezos and maybe a few other guys who made bank off hardware or retail. You'd almost be a bank, vs. an investor -- you would be investing based on a specific credible expenditure. Do it as debt + warrant coverage, or secure against revenue. Just be easy about it -- it should take 5 minutes to make a decision, and you should be adding hardware/distribution/retail/logistics clue to the process to help the founders. YC hardware companies (and, honestly, all startup hardware companies) kind of sucked before the $150k START in W11.
notaddicted 14y ago
I don't think that taking this money precludes founders from raising more money if they need it, as they would have needed to do two years ago before the Start Fund.
- rdl 14y ago
  The problem is raising money during the 3mo YC program is difficult and discouraged. YC founders have said they are discouraged from raising money until Demo Day or beyond, so they can focus on building stuff. In very few cases will $80k vs. $150k make a difference before Demo Day, except for (IMO) hardware, certain other businesses with specific prepayments (maybe a licensing deal like "exclusive 12mo license for Kinect tech for pharmaceutical industry"), etc. But really hardware is the only obvious case.
  - ibdknox 14y ago
    I would actually go further and say it's not just difficult, I imagine it would be near fatal unless you were a well established company walking in. We found fundraising to be an incredibly soul sucking process and without at least a firm grip and a solid plan for what you're doing you wouldn't make it far. While not nearly as bad as fundraising itself, I would also caution people not to underestimate how much work a successful kickstarter is. A lot of work is required, and is continued to be required long after it has finished.

w1ntermute 14y ago

$80k would also be hard to do in SF for Americans. I think YC should do something around the Google Fiber initiative in KC - there's already a startup community congealing around the fiberhoods that have already gone live, and you can make it at least 1.5 to 2 years in KC on $80k, given the ridiculously low cost of living compared to SF.

philwelch 14y ago
But then you'd have to live in Kansas City, not the Bay Area, where all the investors and talent are. There are many parts of the Bay Area less expensive than SF proper.
- w1ntermute 14y ago
  That's why I'm saying that YC should take the first step, since it has the power to make a startup community in KC a real thing. I also think that having the entire tech community concentrated in the Bay Area is a bad thing. It leads to mental inbreeding and a narrow perspective.
  - philwelch 14y ago
    What's the benefit to YC?
    - w1ntermute 14y ago
      As I said, concentrating the community in the Bay Area leads to mental inbreeding and a narrow perspective. Funding Midwestern startups might lead to successes that couldn't have been achieved in the Bay Area. Also, such startups could be funded with less money and will have a longer runway.
      - prostoalex 14y ago
        Why would it be less money? For software startups human capital gets to be the most expensive. Unless KC has a rather large community of brilliant senior engineers, who also happen to be unemployed, you'd have to offer something significant to convince people to move there and pay their (and families') relocation. Bay Area inbreeding partially works because (a) young companies don't have to spend as much on relocation, (b) availability of public transportation makes living and working in different cities plausible.

bsims 14y ago

Can I use this quote? Working on a company built around supplementing credit information to solve this problem. Would be curious to hear an international perspective on this.

pclark 14y ago

$150K is not enough to secure H1B visas either.

ajju 14y ago
Yup, the first thing I thought when I read this: I hope this doesn't end up hurting non-resident applicants to YC. The "prevailing wages" for an engineering position (the minimum salary the company can pay an engineer on a H1B visa) in CA are about $75K. This means that there is almost no leeway even if only one of the founders needs an H1B: this funding alone would not cover it. YC is very aware and supportive of immigrant entrepreneurs though, so I am sure they are already thinking about this. Two mitigating facts: - It is prudent to have enough money in the bank to pay the H1B employee for a year, but this is not a requirement before filing for an H1B, especially if you can show that there are other ways the company can continue to pay the employee. Most significantly: revenue :) - The H1B is not the only route available to non-resident entrepreneurs: the O1 visa is another option, although the requirements are more stringent. I have had to cross a few of these bridges myself, so if I can be of help to anyone reading this, please email me: hnusername@domainINprofile.com
- 001sky 14y ago
  Question - do you need the $75k lump sum, or just the pro-rata per month? its only ~6k/month salary per fte, of course depending on the runway...
  - ajju 14y ago
    The company has to prove that it will be able to pay the employee's salary for the duration of the visa. A lump sum in the bank is the easiest way of doing this. A steady or growing revenue stream per month is another way.
dogan 14y ago
it is
deleted 14y ago
[deleted]

qiqing 14y ago

You can also stay with Chez JJ, which has no such requirement. We've hosted over 20 YC companies in the past year, many of them international, and we also help with orientation to the Bay Area.

ricardobeat 14y ago

YC gives a measly $600 for travelling expenses for the interviews, but suddenly $80k isn't enough? $4k gets you anywhere in the world, and maybe half the western world is reachable with $1k or less. You're not going to spend a substantial portion of $80k on flights unless you go home and back every weekend.

onetwothreefour 14y ago
You don't know what you're talking about. Immigration costs close to $10-15K if it's a real move. Without a US credit history, you're going to have to put down a lot of deposits just to get basic things done like getting a credit card.
- ricardobeat 14y ago
  Maybe I don't. But what about founders before 2010? There are plenty of companies that succeed without being based in the US. Is spending almost 20% of your business runway on immigration worth it?
dmmalam 14y ago
Visas cost 5-10k per founder. We had to pay an extra month of rent as 'deposit'. You will need to fly in and out of the US several times while the visas get process, as the ESTA is only 3 months. A round trip from LON-SF can be 1k per person, and that's from a hub. I've already got enough miles to be bumped up on my frequent flyer prog. It's not the end of the world, and the typical YC company will be resilient enough to survive whatever. However it does add up fast (40k easily), it's not something you can avoid, like say buy a less shiny laptop, and reduces your runway in a meaningful way.
- nikcub 14y ago
  Use visa waivers. They let you stay in the US for 3 months at a time and spending $1k on a ticket at the end of each 3 months is cheaper than paying $5-10k upfront for a visa plus additional flights. If you are worried about the number of times you can enter on a visa waiver, don't - I have entered the USA 50+ times on a waiver and the guys at immigration ask me how I am going and wave me on each time. This was even more fun before they closed 'The Mexican Loophole', where you could drop out to Mexico for the weekend and get a new visa on the way in. I had a lot of fun weekends in Mexico before they shut that down. You now need to leave the North American continent (they included Central America when people started flying to Belize to get new US entry visa's)