i sometimes think yc is just a front to secure payment for hn servers for many many years.
This is the key part IMO. It's easy to give up 10% of what is essentially an idea in your head in exchange for $500K and some legitimacy from a big brand. That is exactly how an "accelerator" is supposed to work. If you have spent time (sometimes years of your life) and significant money actually building a product, finding a market fit and gathering customers, YC's terms will likely be much harder to swallow.
Firstly, unless you and your co-founders permanently relocate, you could start to burn through that $500k pretty quickly in travel costs. Is relocating to the USA legal for you? Will it cost you more money compared to your current cost of living? Do you have existing staff or facilities that you would be unable to supervise or move?
The article mentions how useful to them YC's resources and team were to answer questions about business operations like finance and paperwork. How applicable would these be if you're not registered in the USA, even if not in a particular state? Would YC's advice with, say, employment law, have any value if you were incorporated in Switzerland?
The same points would probably apply to the benefits offered by any further early investors that YC could introduce. All in all, after taking away the 'overcoming imposter syndrome', 'answering boring questions' and 'founder community' reasons, it looks to me like an expensive way to get a bit of capital and credibility for those outside of the USA. I would be especially interested to hear from non-American YC founders who would beg to differ.
YC isn't some philanthropic business program - its a Venture Capital fund. They make money when the companies they invest in go on to be worth billions of dollars. That almost always means the best possible outcome is you end up as a company registered in Delaware and listed on the New York Stock Exchange. If that isn't on your horizon, I'd argue that venture capital isn't attractive at all.
The USA-centric approach makes sense once you understand the expectation is for your company to be worth billions.
Edit: I should also add that YC is trustworthy as well (easy to underestimate this part).
It shut down over a year later, but it was an interesting effort.
You’re going to get in front of any VC even remotely in your sector if you do anything interesting and solidly executed.
And if you bust out completely you’re going to be on a first name basis with dozens of people who didn’t and now run highly-connected going concerns.
And you sign a highly-standardized, heavily-scrutinized SAFE with very founder-friendly convertibility?
Anyone who is meh on that? Must be fucking nice.
Over a decade ago, I emerged from an underprivileged local community and stumbled upon YC's content randomly, without finding the original links or names associated. Googled randomly.
I struggle to comprehend why we can't bring together the brightest minds, irrespective of their backgrounds, race, location, or financial status. As evidence, @amasad (YC10) wrote that he couldn't launch with YC in today's environment.
In the case of my most recent startup, which I developed in San Francisco, we opted not to pursue YC due to their substantial equity requirements. The time has come for YC to instigate changes, giving priority to technology over politics, and reigniting the technological renaissance of startups.
We (as society) can. We simply choose not to.
1. We applied to YC and initially started work on what we referred to as "data-stack-as-a-service". The premise was to provision, configure, and maintain the different components required for a data stack: Data Warehouse, Integrations, Transformations, Visualizations, etc. We had a working product and a few paying customers. Ultimately we decided to pivot as we felt the market for this was only small companies with small budgets (many of whom might not even need a mature data stack).
2. Then we released a small open-source tool for Postgres that could easily send webhook notifications when data was changed (pg triggers sent websocket messages to a Go application). Off of this we dove deeper into database tooling and building a platform that offered branching, change management, and other modern features for Postgres. We also had a prototype and slightly larger contracts with a few early customers here. We decided to pivot from this for a few reasons, but ultimately we lost conviction in the idea and were more excited about data import challenges that came up during user interviews.
3. As you mentioned, we're now working on CSV import as a service. After building and maintaining CSV import tools many times ourselves, we believe there's an opportunity to provide a robust, pre-built experience. There are actually a few other products in the market today. Our initial focus is to be the most developer-friendly choice (a big part of why we're open source). We want the decision to leverage an existing service to be a no-brainer for any engineering team tasked with supporting CSV import.
If you're building a vertical SaaS and want to support import from a file, and don't want to spend time reinventing the wheel, this could be a big win. This would let new users bring in existing data from another SaaS (that supports CSV export) or where the incumbent is likely to be Excel. The development time it would take to make something like this solid, usable, and flexible enough to handle different formats would, in most cases, be better spent on building domain-specific functionality.
While I haven't yet seen the pricing for your link or the OP, this seems like a case where there aren't many negative tradeoffs.
If CSV import is not enough of a product (I believe it is) you can add exporting functionality (e.g. export this table to CSV and deliver to SFTP exactly once, but make sure to handle target downtimes) and you have an "Enterprise File Gateway" that could reduce development costs in many companies.
I think nearly any startup would benefit unless the founders entered into business with a strong perspective and network.
From a macchiavellian perspective, it does appear that the benefits mostly attach to the founders (unless you are selling products to startups) and the 10% attaches to the company, which suggests that the optimal strategy post-YC may be to fail and start another company.
Edit - Obviously I'm not suggesting killing a good company that hits it big and gets a bunch of traction, but if your post-YC company isn't in that position (and almost all of them aren't, by the way, thanks to the risky nature of startups), you have some very awkward math to do on whether to pivot or shut down.
From a macchiavellian perspective, you also have to consider how much benefit the founder would stand again from having a more successful startup instead of failing.
We incorporated in April, started with nothin' and had funding by the end of June.
Raising Capital is _very_ time consuming & distracting. I did a bunch of up front work; the first month (April - early May) I had to build designs, meet potential customers, build out profiles, get them to write letters of interest, etc.
Then starting mid-may I spent 6 weeks cold emailing and getting intros to as many VCs as I could. I had to have spent 40 hrs writing cold emails, at least 60+ hrs in meetings and obviously many more prep. At the same time, I lined up a team to be hired, lined up more potential customers, developed some of the product.
Going into YC, you can apply and skip the 6 weeks drudging around trying to raise. This 100% slowed development to a stand-still and reduced customer engagement. Further, I had to take funding at terms worse than what YC offers. On the other hand, I have a lot of industry experience and was able to instantly hire a good team and we're getting ready to launch in sept (5 months after incorporating & 3 months after funding).
- we were in a bad place and, while a start-up in a good place could raise more than YC's $500k in exchange for 10% of the business, we couldn't.
- we gained access to the knowledgebase that YC built of all the problems (incorporating, tax filing, banking, HR systems, etc.) and, for anything not in the KB, you can use their legal team.
- attaching the YC brand to your name adds legitimacy
- we forged strong friendships with many of our batchmates. We continue to meet on a regular basis to share updates, ideas, and provide support to each other. Having other people that can listen and empathize with the challenges you're experiencing goes a long way.
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Following YC taught us to make what people love. Not being accepted meant that it took us a little longer as we had to build our own network. In a way I'm actually proud we managed to come so far self funded, Investor check is nice but user love holds far more value for us now.
The optimum path for all startups is to either bootstrap entirely or bootstrap up until the Series A where your negotiation position is the strongest because you know your unit economics and can demonstrate clear product-market fit.
Of course many startups may simply not be able to bootstrap. But equally there are many startups who could but choose the YC/VC track because of cargo culting, naivety or ignorance of all of the issues that it comes with e.g. dilution and the low percentage of startups making it to Series-A.
I would argue that most founders instead of emulating Stripe, Airbnb etc should look to florists, bakeries, ecommerce sites etc and learn the fundamentals for growing a business in a cost-effective and sustainable way. And then decide after they have a successful lifestyle business whether YC/VC will take them to the next level.
I think it might help to remember the investment strategy VC firms have. No matter how you structure a startup, it is more likely than not to fail; that's what companies do. The winners in an investment portfolio have to pay for the losers, which mean the winners have to pay big. And funds themselves have lifespans; for several reasons, they need to reach an answer on investments within a set timespan.
I think not raising money at all is a great strategy, and when it's viable, it's probably always superior. But if you're going to raise at all, slogging it out on pure sweat equity isn't a great way to build up credibility for an A-round. It might have been in 1999, but I don't think it is now; now, I think if you want to raise an A-round, the happy path is to raise a syndicated seed round first, and clearing the way for that seed round is probably one of the 3 biggest things you get out of YC.
VC funded is more likely to hit a 1B exit
Depends on goals….
And yes I chose bootstrap.
> 10% is a meaningful chunk of a company. While $500k sounds generous, many startups with traction could easily raise that money on much better terms.
How much traction would likely earn the money on much better terms and what would make the terms much better? I've been interested in Y Combinator or raising funds for what I'm working on but I'm still prepping to launch the MVP so there are no users yet. It'd be useful to be able to gauge what types of MVPs and launches or pre-launches may make the cut. Thanks!
How do I train myself to show excitement again about my ideas to people?
Kind of like how some businesses run entirely inside spreadsheets, it stands to reason a portable table format like CSV would end up being an important step in a company starting to automate some things.
Saved you a click.
If the general consensus is that YC is worth it, then why bother publish something to state the obvious. I'd be more interested in cases or scenarios where the founders felt YC wasn't worth it, which I believe would be very low or non-existent.
Only because your sample size are people who've attended YC.
Ask all startups whether they think YC is worth it and the percentage will be significantly higher. Because if you're an experienced founder then the benefits versus dilution equation will be far different than someone who is straight out of college.
