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Is Y Combinator worth the money?

news.ycombinator.com

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Re: Is Y Combinator worth the money?

#91

Post by acecreamu »

seizethecheese wrote: post #59

> Now, with a 500k deal, the amount is more substantial, but in turn, its terms are not super funder-friendly. Imho, the previous 125k deal was better for the founders since once the company gets accepted to YC it can raise easily a lot more money and on better terms. Wait, the additional $375k is an uncapped SAFE. How could a company “easily raise at better terms”?

Add one angel or one early commit of 10k to it and the uncapped SAFE turns into a very bad SAFE. Basically it blocks you from flexibility of building up fundraising moment gradually.

Re: Is Y Combinator worth the money?

#92

Post by hindsightbias »

quest88 wrote: post #68
pbhjpbhj wrote: post #50

Earlier quoted context omitted.

>>Some of the advice I did not take and did the opposite and it was the right decision. // FWIW that does not mean the advice was wrong. Trivial example: "head East, there's a great bakery there", "I went West and found a place for a lovely lunch". Unless the parent elucidates (and maybe even then) you can't tell if the advice was right or wrong.

Then why do you need the VC

Because a lot of first-time founders have no idea what they're doing and other experts are at least experts whether they're 100% right or not. Anyone on Sand Hill is probably a better resource than some guy down the alley.

Re: Is Y Combinator worth the money?

#93

Post by cl42 »

rexreed wrote: post #84
cl42 wrote: post #37

I went through YC in S12 and have been investing in YC companies + active on Bookface and YC’s founder matching program. I recommend YC to almost everyone I meet and plan to apply again when/if I am working on a new product company. We’re all adults and we all have agency. Every community is a function of how much you put into it; how much you invest in getting to know others. It feels like the author expected YC to…

When you recommend YC, how do you help the people you recommend actually get in to the YC program?

Do the things that make you seem like a great startup/founder regardless of YC: show you can execute. This means coding or launching experiments, and show that whatever you're doing is getting some sort of a market response.

A lot of people think YC has some secret formula they will teach you (I think maybe OP made this mistake?), in reality they are very open: build product and talk to users.

If you can do that well, you'll get in.

It's amazing how few people actually "get" this, though. I recently met with a friend who is running a consulting firm and is convinced he has a product... But there's no demo, customers can't just sign up -- they need to speak with him and it takes a few weeks to onboard them, etc... Yet his deep (and well-meaning, I'm sure!) belief is that he has a product. Nothing I say will convince him otherwise.

10 years post YC, I find most of the issues people have with startups (getting in to YC included) is they overcomplicate their interpretation of what YC says you should do.

Re: Is Y Combinator worth the money?

#94

Post by acecreamu »

pcthrowaway wrote: post #53
acecreamu wrote: post #2

Happy to honestly answer any brutal questions you have!

Do you think YC would make sense for a company that doesn't intend to raise money beyond the YC investment? I have an idea for a b2c product I want to build that has a few paths to revenue (and a possible b2b offshoot), as well as acquisition by FAANG (or FAANG-adjacent). Is there something about taking investment from YC that prevents me from turning around and selling it for $2M after building it out a bit more? Al…

Any investor would hate this idea, it's a terrible deal for them, and YC are smart enough to get it out of you. The whole business of VC is to sell later at the higher price. If they give you money at val of 5M+ and you sell for 2M - they are in loss.

Re: Is Y Combinator worth the money?

#95

Post by acecreamu »

monetus wrote: post #19
acecreamu wrote: post #2

Happy to honestly answer any brutal questions you have!

With the market conditions right now, have any ideas about how it could be better? It sounds like structural critiques; like a smaller, tighter community that onboards with better incentives, enables more efficient engagement with the alumni and batch would be a big gain. And importantly, like ycombinator could show more flexibility and interest in the batch. That sounds like a smaller network overall though, with le…

I think they did a right move - making the batch smaller and moving it back in-person. The money amount that was not very attractive at 2021 makes a lot more sense in 2023 as well.

As for the community I believe it can only be build relatively strong for <100 people. Hence, smaller niche-specific batches?

Re: Is Y Combinator worth the money?

#96

Post by pcthrowaway »

acecreamu wrote: post #94
pcthrowaway wrote: post #53

Earlier quoted context omitted.

Do you think YC would make sense for a company that doesn't intend to raise money beyond the YC investment? I have an idea for a b2c product I want to build that has a few paths to revenue (and a possible b2b offshoot), as well as acquisition by FAANG (or FAANG-adjacent). Is there something about taking investment from YC that prevents me from turning around and selling it for $2M after building it out a bit more? Al…

Any investor would hate this idea, it's a terrible deal for them, and YC are smart enough to get it out of you. The whole business of VC is to sell later at the higher price. If they give you money at val of 5M+ and you sell for 2M - they are in loss.

It's not val of 5M though? It's ~1.7M IIUC. 7% for 125K, an additional 375K can be invested though, with additional equity attached. Is that not right?

edit: Investors are also expecting to take a loss on many of the investments. 2M is one exit option, which still gives them +17% return on investment

I know that's not the standard type of exit YC are looking for, and I'm open to growing a bit more, but not as interested in taking additional investments. Final exit could end up being 10M for all I know.

I just think this growth at all costs attitude needs to change a bit with the current economy. I'd be happy to take $80K for a 7% investment also, but they have a standard deal which I think perverts the incentives and, frankly, leads to outcomes where they're pushing you to take more investment even if you could just have a sustainable business pulling in 10-30K MRR or something

Re: Is Y Combinator worth the money?

#97

Post by acecreamu »

ahstilde wrote: post #20
acecreamu wrote: post #2

Happy to honestly answer any brutal questions you have!

How much did your company raise in total, and at what valuation? Would it have been able to do so without YC?

I can say, we didn't see significant uplift at Demo Day, the highest bump of valuation happened when we got accepted, it's fair to assume we wouldn't get it otherwise.

I can't answer your question completely as in the end we decided not to raise and returned the money...

Re: Is Y Combinator worth the money?

#98

Post by acecreamu »

ychnthrowaway24 wrote: post #89
acecreamu wrote: post #2

Happy to honestly answer any brutal questions you have!

What led you to shut down and not continue and pivot?

Huge % of dilution after going through two accelerators (EF and YC). Would be too much of a burden to drag into a new venture.

Re: Is Y Combinator worth the money?

#99

Post by necubi »

ngiyabonga wrote: post #26

I find these two concepts [1, 2] at odds with each other. Not a critique on the author - on the contrary, empathy: I felt the same when applying to YC (did not make a batch). On one hand, the general impression you get when preparing for your application (via FAQs, Startup School, YC videos, etc) is very much in line with [1] - YC is looking for _very_ early stage. But once you go through the actual application you f…

> But once you go through the actual application you feel focus shift towards [2] - metrics and $. That is to say (with admittedly some not-having-been-selected bias), I feel [2] is a significant factor in deciding on applications.

While the application does ask about that (and I'm sure it's very helpful for getting in if you've already demonstrated traction) it's absolutely not required to have any revenue or users when getting accepted into YC. I'm in the current batch. We applied before we'd built anything and definitely before we had any users (we didn't even have a name yet -- we had to pick one in order to submit the application). Across the batch there are a few companies that came in with strong traction but they're definitely in the minority.

Re: Is Y Combinator worth the money?

#100

Post by HWR_14 »

celestialcheese wrote: post #32

> In the end, YC is an investor, an investor with a strong reputation, who is now sitting in a very comfortable chair and can select the best startups and invest in them at a meager price Wait what? a ~$7m valuation, _pre product_, is considered meager these days?

A ~$7MM valuation? Did you read the same math I did? I see an investment at ~$1.8MM valuation and another investment as an MFN SAFE.
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