Ask HN: Submit Questions for Office Hours with YC

Hi Sam,

I'm the CEO of an on-demand app that is getting a lot of traction and partnerships with brick and motor stores.

1) Right now we are doing a simple 60-40 split of profits between us and our delivery drivers. Do you see any downside to this?

2) Should we enlist the help of an MBA grad to help scale for when shit hits the fan since we're growing so quickly?

3) How can we stand out when applying for YC or any other VC? I don't want to be seen as just another Uber for X.

My company has paying customers, good unit economics, a mature technology platform and customer retention is good. The reality is that we have not found a way to gain net new customers in a scalable way so we are doomed to grow at a very slow pace in the current market. We are obviously working on gaining customers faster but the channels that convert well have no scalability. Suffice for the sake of the question that we will not find a reasonable growth channel the coming year.

We believe that pursuing an M&A transaction with other players that can offer our product to their existing customer base is the best way to realize its full potential.

We also believe that additional fundraising is useless as the value of the company will not increase significantly for a potential acquirer.

Luckily, We are in a space that's acquisition-heavy and we have MANY potential acquirers. Overall there are 5 types of acquirers that could find strategic value in buying us.

I have digged up what I could find online about preparing for M&A and selling a company. However, the advice is pretty generic with statements like "companies are bought not sold". This is obviously the best case and will probably be the most lucrative type of acquisition as well. The reality is that we want to run a competitive auction in a relative short (6m) time-window before we have to pursue additional funding.

Given this opportunity, it would be amazing to clarify the following questions:

1/ How direct should we be about wanting to sell the business when talking to potential acquirers.

2/ Have you seen companies successfully soliciting M&A and running a competitive deal process? If yes, what tactics have you seen that worked and what tactics killed deals?

3/ What drivers do you see most often for corporates to close the deal? For example, from our experience raising VC it is pretty clear that for VC's the main drivers to close are fear of missing out or greed and absent those the "deal" keeps getting delayed forever.

4/ When corporates buy startups, what's the typical timeline they need to see ROI on their investment.

5/ I understand that founders are often locked-in for some period of time and the money is escrowed until certain milestones are reached. What are common milestones corporates set?

6/ How do VC's perceive companies that want to sell? Assuming our VC will be supportive, what can we expect a VC to help with? Obviously they will introduce us to firms they have relationships with but can we also ask them to spread the word to PE firms that own potential acquirers or build a connection to potential acquirers board. How much engagement can we realistically expect here?

7/ Any terms we should be watchful of to avoid getting screwed post-acquisition?

Hi Sam, I need to take my startup to next level and that requires me to work with established companies. However now everything I have is a not so fancy looking site and user traction is low. Should I start engaging potential partners and pitch my idea first or focus on getting user traction up before anything else? Thanks!

1-I am looking to apply to YC and the project fits 2 categories of among the "Request for StartUps" categories [AI and Mass Media], Is this ok if the product touches on these areas but is not defined by them specifically?

There is no exact category for product ( it detects forms of hate speech and allows users to "talk back" through various specific tools, using "ai"/ linguistics & intelligence,and elements of gaming and interactive storytelling on the interface.

2-Also, the "diversity" "Request for StartUps" category, does the YC mean the founder is "diverse" or the product is aimed at a "diverse" market? I am "diverse" but the product isn't particularly aimed at a "diverse" audience.

3-Also, (I think the answer is "no":) do you ever let founders take less money (say 60k for 3.5% instead of 120k for 7%)?

4-if the company/person does not have $$ and is not incorporated yet, how long does it take to get a minimum amount (just so you can deal with the expenses of getting there and being there initially) from YC once you arrive in SV?

5-Do you consider someone who is self-taught and built the prototype herself but does not have a "real" CS background or has ever worked as an "engineer", a "technical founder"?

Thanks!

Structural engineering. I have a startup in the field and I have spoken with a European team in the same field that got an interview to YC as well. However, YC and others seem to have an aversion to this field as it can be slow moving to adopt new technologies. Is this true? Most of us in the field feel that it is ripe for the picking.