Y Combinator

Y Combinator Management, LLC
Limited liability company
Industry Venture capital
Founded March 2005 (2005-03)
Founder Paul Graham, Jessica Livingston, Robert Morris, Trevor Blackwell
Headquarters Mountain View, California, United States
Number of locations
 2 offices (2014)
Key people
 Sam Altman, Paul Graham, Jessica Livingston, Robert Morris
Products Investments
Website www.ycombinator.com
Paul Graham talking about Prototype Day at Y Combinator Summer 2009

Y Combinator is an American seed accelerator, started in March 2005. Y Combinator has spawned a number of highly successful companies and is consistently ranked at the top of U.S. accelerators.[1]

Programs

In its main program, Y Combinator interviews and selects two batches of companies per year. The companies receive seed money, advice, and connections in exchange for 7% equity.[2] The program includes "office hours", where startup founders meet individually and in groups with Y Combinator partners for advice. Founders also participate in weekly dinners where guests from the Silicon Valley ecosystem (successful entrepreneurs, venture capitalists, etc.) speak to the founders.

Y Combinator’s motto is "Make Something People Want."[3] The program aims to focus the founders on further developing their product, team and market, refining their business model, achieving product/market fit, and scaling the startup into a high growth business, etc. The program culminates at Demo Day where startups present their business to a selected audience of investors.[4]

As of 2017, Y Combinator had invested in ~1,450 companies including Dropbox, Airbnb, Stripe, Reddit, Optimizely, Zenefits, Docker, DoorDash, Mixpanel, Heroku.[5] The combined valuation of YC companies was over $80B.[6]

Non-profit organizations can also participate in the main YC program.[7]

In 2015, YC introduced additional programs:

  • In July 2015, Y Combinator introduced the YC Fellowship Program aimed at companies at an earlier stage than the main program.[8]
  • In October 2015, Y Combinator introduced the YC Continuity Fund. The fund allows Y Combinator to make pro rata investments in their alumni companies with valuations under $300 million. Y Combinator will also consider leading or participating in later stage growth financing rounds for YC companies.[9]
  • In October 2015, YC introduced YC Research to fund long-term fundamental research. YC President Sam Altman donated $10m.[10]

History

Y Combinator was started in 2005 by Paul Graham, Jessica Livingston, Trevor Blackwell and Robert Tappan Morris.[11] From 2005 to 2008, one program was held in Cambridge, Massachusetts, and one was held in Mountain View, California. In January 2009, Y Combinator announced that the Cambridge program would be closed and all future programs would take place in Silicon Valley.[12]

In 2009, Sequoia Capital led the $2 million investment round into an entity of Y Combinator which would allow the company to invest in approximately 60 companies a year as opposed to their previous 40 companies a year.[13] The following year, Sequoia led a $8.25 million funding round for Y Combinator to further increase the number of startups the company could fund.[14]

Then, in 2011, Yuri Milner and SV Angel offered every Y Combinator company a $150,000 convertible note investment.[15] The amount put into each company was changed to $80,000 when Start Fund was renewed.[16]

In September 2013, Paul Graham announced Y Combinator would fund nonprofit organizations accepted into its program after having tested the concept with Watsi (while continuing to fund mostly for-profit startups).[17]

In 2014, founder Paul Graham announced he was stepping down and that Sam Altman would take over as President of Y Combinator.[18] That same year, Altman announced "The New Deal" for YC startups, which offers $120,000 for 7% equity.[19][20]

Late in 2014, Sam Altman announced a partnership with Transcriptic to provide increased support for Y Combinator's growing community of biotech companies.[21] Then in 2015, he announced a partnership with Bolt and increased support for hardware companies.[22]

On 11 August 2016, YC announced that YC partners will be visiting 11 countries this fall to meet with founders and learn more about how we can be helpful to international startup communities. These 11 countries are Nigeria, Denmark, Portugal, Sweden, Germany, Russia, Argentina, Chile, Mexico, Israel, and India.[23][24]

In September 2016, Y Combinator announced shuffling the deck at the Mountain View startup accelerator again, with Altman announcing that he will now be president of YC Group, which includes Y Combinator, the YC Continuity fund that was launched last October and the YC Research "moon shot" program. Ali Rowghani, Twitter's former chief financial officer and chief operating officer who was put in charge of the YC Continuity Fund when it started, is now CEO of YC Continuity. Michael Seibel, who co-founded Justin.tv, is the new CEO of YC Core, the program that Paul Buchheit has run since earlier this year.[25]

Major competitors

People

Y Combinator was founded in March 2005 by Paul Graham and Jessica Livingston as well as Robert Morris and Trevor Blackwell, with whom Paul had previously co-founded Viaweb.

In early 2010, Harj Taggar, cofounder of Y Combinator-funded Auctomatic, joined as an advisor. In September 2010, Alexis Ohanian, co-founder of Y Combinator-backed Reddit, joined.[26] In November 2010, Gmail creator Paul Buchheit and Harj Taggar were named partners.[27] In 2015, Taggar left YC to start Triplebyte, a startup aiming to assist companies with their technical hiring needs.[28]

In January 2011, Y Combinator-backed Posterous co-founder Garry Tan joined YC, first as designer-in-residence and later as partner.[29]

Later in 2011, Aaron Iba joined as a partner.[30]

In the summer of 2014, Sam Altman became president of Y Combinator.[18] Y Combinator also announced a Board of Overseers: Brian Chesky, cofounder of AirBnB, Adora Cheung, cofounder of Homejoy, Patrick Collison, cofounder of Stripe, Drew Houston, founder of Dropbox, Jessica Livingston, David Rusenko, Emmett Shear, and Sam Altman, cofounder of Loopt.

In January 2015, it was announced that Paul Buchheit would be named managing partner for Y Combinator's core program and Kevin Hale would be the managing partner for the Fellowship.[31]

As of February 2015, additional Y Combinator partners are Dalton Caldwell, founder of imeem and app.net; Jared Friedman, founder of Scribd; Kevin Hale, cofounder of Wufoo; Aaron Harris, cofounder of Tutorspree; Justin Kan, cofounder of Exec, Twitch.tv and Justin.tv; Attorneys Carolynn Levy and Jon Levy; Kat Manalac; Kirsty Nathoo; Geoff Ralston, creator of Rocketmail; and Michael Seibel, cofounder of Socialcam. Ali Rowghani is the managing partner of YC Continuity.[32]

Controversies

Y Combinator has been blamed for its encouragement of the ageism culture in Silicon Valley. Paul Graham said in 2005 that people over 38 lacked the energy to launch startups.[33] It was also at a Y Combinator event, the 2007 Startup School, that Mark Zuckerberg said, "Young people are just smarter".[34]

Nonprofits

In 2013, Y Combinator began accepting nonprofit organizations. Notable Y Combinator-backed nonprofits include:[35]

  • Watsi (crowdfunding medical treatment in developing countries)
  • Zidisha (direct person-to-person lending to developing countries)

YC Fellowship

The YC Fellowship Program was announced in July 2015, with the goal of funding companies at the idea or prototype stage.[8] The first batch of YC Fellowship included 32 companies that received an equity-free grant instead of an investment.[6]

In January 2016 Y Combinator announced version 2 of the program, with participating companies receiving $20k investment for a 1.5% equity stake. The equity stake is structured as a convertible security that only converts into shares if a company has an IPO, or a funding event or acquisition that values the company at $100m or more.[36] The YC Fellowship was short lived, however, as in September 2016 then CEO Sam Altman announced that the fellowship will be discontinued. In 2017, Y Combinator announced Startup School, an online course that released public videos and also coached individual startups on a larger scale to replace the fellowship. 1584 startups graduated the program in its first year.[37] In 2018, Y Combinator announced a new batch of startup school. After a software glitch, all 15,000 startups that applied to the program were accepted.[38]

YC Research

YC Research logo

Nonprofit research lab YC Research was announced in October 2015. Researchers are paid as full-time employees and can receive equity in Y Combinator.[10][39][40] OpenAI was the first project undertaken by YC Research, and in January 2016 a second study on basic income was also announced.[41] Another project is research on new cities.[42]

Human Advancement Research Community

The Human Advancement Research Community (HARC) project was set up with the "... mission to ensure human wisdom exceeds human power ...".[43][44] The project was inspired by a conversation between Sam Altman and Alan Kay.[45] Its projects include modelling, visualizing and teaching software, as well as programming languages. Its members include Alan Kay and Bret Victor. Other people who have worked for HARC include Vi Hart. Patrick Scaglia was chair of HARC and was listed as an advisor in 2017.[46][47]

Media coverage

In 2017 Forbes ranked YC one of two "Platinum Plus Tier U.S. Accelerators".[48] Fast Company has called YC "the world's most powerful start-up incubator".[49] Fortune has called Y Combinator "a spawning ground for emerging tech giants".[50]

See also

References

  1. ↑ Konrad, Alex. "The Best Startup Accelerators Of 2017". Forbes. Retrieved 2018-06-19.
  2. ↑ Altman, Sam. "The New Deal". Y Combinator. Retrieved 22 April 2014.
  3. ↑ Graham, Paul (April 2008). "Be Good". PaulGraham.com. Retrieved 8 February 2016.
  4. ↑ Graham, Paul (June 2014). "What happens at YC". Y Combinator. Retrieved 8 May 2013.
  5. ↑ "YC Companies". Y Combinator. Retrieved February 8, 2018.
  6. 1 2 "Y Combinator". Y Combinator. June 12, 2017. Retrieved June 12, 2017.
  7. ↑ Graham, Paul (September 2013). "YC Will Now Fund Nonprofits Too". Y Combinator. Retrieved 18 October 2016.
  8. 1 2 Loizos, Connie (July 20, 2015). "Y Combinator Just Introduced a New Program to Reach Up to "1,000" Companies Per Year". TechCrunch. Retrieved July 21, 2015.
  9. ↑ Altman, Sam (October 15, 2015). "YC Continuity". Y Combinator. Retrieved February 8, 2016.
  10. 1 2 Altman, Sam (October 7, 2015). "YC Research". Y Combinator Posthaven. Retrieved October 22, 2016.
  11. ↑ Graham, Paul (March 15, 2012). "How Y Combinator Started". Y Combinator. Retrieved October 22, 2016.
  12. ↑ Graham, Paul (January 2009). "California Year-Round". Y Combinator. Retrieved October 22, 2016.
  13. ↑ "Y Combinator Gets The Sequoia Capital Seal Of Approval". TechCrunch. 2009-05-16. Retrieved 2011-02-10.
  14. ↑ Rao, Leena (21 May 2010). "Y Combinator Closes New $8.25 Million Fund, Sequoia Is Lead Investor". TechCrunch.com. Retrieved 22 June 2016.
  15. ↑ Arrington, Michael (January 28, 2011). "Start Fund: Yuri Milner, SV Angel Offer EVERY New Y Combinator Startup $150k". TechCrunch. Retrieved October 22, 2016.
  16. ↑ Rao, Leena (November 26, 2012). "Y Combinator's YC VC Will Replace The Start Fund; Includes Yuri Milner, Andreessen Horowitz But Offers Less Money". TechCrunch. Retrieved October 22, 2016.
  17. ↑ Ken Yeung (6 September 2013). "Y Combinator To Fund Non-Profit Startups With Charitable Donations". The Next Web. Retrieved 1 October 2014.
  18. 1 2 Graham, Paul (February 21, 2014). "Sam Altman for President". Y Combinator. Retrieved October 22, 2016.
  19. ↑ Altman, Sam (April 22, 2014). "The New Deal". Y Combinator. Retrieved October 22, 2016.
  20. ↑ "Y Combinator's 'New Deal' for startups: More money, same 7% equity". VentureBeat. Retrieved 2016-11-29.
  21. ↑ Altman, Sam (December 8, 2014). "Transcriptic for YC biotech startups". Y Combinator. Retrieved October 22, 2016.
  22. ↑ Altman, Sam (February 5, 2014). "YC for Hardware". Y Combinator. Retrieved October 22, 2016.
  23. ↑ Manalac, Kat. "YC Office Hours in 11 Countries This Fall". Y Combinator Posthaven. Retrieved 10 September 2016.
  24. ↑ Modgil, Shweta. "YCombinator Is Coming To India This September; Here's Why You Should Be Excited". Inc 42. Retrieved 10 September 2016.
  25. ↑ Schubarth, Cromwell (13 September 2016). "Y Combinator names new leaders as it changes shape again". Silicon Valley Business Journal. Retrieved 18 October 2016.
  26. ↑ Wednesday, September 1st, 2010 (2010-09-01). "Reddit Cofounder Alexis Ohanian To Join Y Combinator". TechCrunch. Retrieved 2012-02-28.
  27. ↑ Graham, Paul (2010-11-12). "Y Combinator announces two new partners, Paul Buchheit and Harj Taggar". Y Combinator Posterous. Retrieved 2012-02-28.
  28. ↑ Former YC Partner Harj Taggar Is Building The New Technical Hiring Pipeline With TripleByte (May 7, 2015), Kim-Mai Cutler, TechCrunch
  29. ↑ Melanson, Mike (2011-01-14). "Posterous Co-Founder Garry Tan Leaves for Y Combinator". Readwriteweb.com. Retrieved 2012-02-28.
  30. ↑ Tan, Garry (January 23, 2012). "Welcome Garry and Aaron". Y Combinator Posthaven. Retrieved October 22, 2012.
  31. ↑ Altman, Sam (January 8, 2016). "YC Updates and Additions". Y Combinator. Retrieved February 8, 2016.
  32. ↑ "People". Y Combinator. Retrieved October 22, 2016.
  33. ↑ "How to Start a Startup". paulgraham.com.
  34. ↑ "Say what? 'Young people are just smarter'". 28 March 2007.
  35. ↑ Keys, Patrick (January 24, 2014). "Zidisha Is International Microlending, Immunity Project Is An HIV Vaccine; Two Nonprofits Currently Doing Y Combinator". Y Combinator Universe. Retrieved October 22, 2016.
  36. ↑ "Fellowship V2". Y Combinator Posthaven. Retrieved 2016-01-27.
  37. ↑ "1500+ startups graduate Y Combinator's first online Startup School". TechCrunch.
  38. ↑ "Y Combinator accepts 15,000 startups into its online school after software glitch causes confusion". VentureBeat.
  39. ↑ Yeung, Ken. "Sam Altman commits $10M to start Y Combinator research lab". VentureBeat.
  40. ↑ Newton, Casey (7 October 2015). "Y Combinator is launching its own in-house moonshot group". The Verge. Vox Media.
  41. ↑ "YCR is a non-profit research lab". Y Combinator Research. Retrieved October 22, 2016.
  42. ↑ Cheung, Adora. "New Cities".
  43. ↑ Research, Y Combinator. "HARC". harc.ycr.org.
  44. ↑ "Y Combinator launches new "Human Advancement Research Community"". 11 May 2016.
  45. ↑ "Y Combinator Research launches Human Advancement Research Community, Alan Kay participating". 11 May 2016.
  46. ↑ Altman, Sam. "HARC".
  47. ↑ "Members". 26 November 2017.
  48. ↑ "The Best Startup Accelerators Of 2017". Forbes.
  49. ↑ "The Y Combinator Chronicles". Fast Company.
  50. ↑ Rao, Leena (2015-08-26). "Meet Y Combinator's New COO". Fortune. Retrieved 2016-02-08.
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