Y Combinator Explained

Y Combinator Management, LLC
Type:Private
Location City:San Francisco, California
Location Country:United States
Locations:2 offices (2014)
Industry:Startup accelerator
Key People:Garry Tan (CEO)
Michael Seibel
Jared Friedman
Products:Venture capital, investments
Founders:Paul Graham, Jessica Livingston, Robert Tappan Morris, Trevor Blackwell

Y Combinator Management, LLC (YC) is an American technology startup accelerator and venture capital firm launched in March 2005[1] which has been used to launch more than 4,000 companies.[2] The accelerator program started in Boston and Mountain View, expanded to San Francisco in 2019, and was entirely online during the COVID-19 pandemic.[3] Companies started via Y Combinator include Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Reddit, Stripe, and Twitch.[4]

History

Founded in 2005 by Paul Graham, Jessica Livingston, Robert Tappan Morris, and Trevor Blackwell,[5] Y Combinator (YC) initiated operations with concurrent programs in Cambridge, Massachusetts, and Mountain View, California. However, operational complexities arising from managing two programs prompted a consolidation in January 2009, resulting in the closing of the Cambridge program and the centralization of activities in Silicon Valley.[6]

In 2009, Y Combinator secured a $2 million investment led by Sequoia Capital, enabling increased annual funding for around 60 companies.[7] Sequoia further supported YC in 2010 through an $8.25 million funding round, bolstering the organization's capability to accommodate a growing number of startups.[8] Concurrently, Kirsty Nathoo joined the team, initially as an accountant, and subsequently as the Chief Financial Officer (CFO) in 2012.[9] In 2011, Yuri Milner and SV Angel offered every Y Combinator company a $150,000 convertible note investment.[10] The amount put into each company was changed to $80,000 when Start Fund was renewed.[11]

Advisory roles were assumed by Harj Taggar and Alexis Ohanian in 2010,[12] and Paul Buchheit and Harj Taggar were named partners in November.[13] Michael Seibel joined Y Combinator as a part-time partner in January 2013 before becoming a full-time partner in 2014.[14] In September 2013, Y Combinator began funding nonprofit organizations that were accepted into the program after testing the concept with Watsi.[15] Sam Altman took part in Y Combinator's inaugural cohort in 2005 as a founder.[16] In 2014, Paul Graham appointed him as President.[17] Altman introduced a revised equity offering of $150,000 for a 7% stake.[18] Collaborations with Transcriptic and Bolt improved support for biotech and hardware startups.[19] [20]

Global outreach became evident in 2016 as YC partners embarked on visits to 11 countries (Nigeria, Denmark, Portugal, Sweden, Germany, Russia, Argentina, Chile, Mexico, Israel, and India) to engage with founders and learn about international startup communities.[21] That summer, Altman returned to Y Combinator as a founder and worked on OpenAI.[22] Leadership responsibilities were delegated to Ali Rowghani and Michael Seibel for YC Continuity and YC Core programs, respectively.[23] Startup School, introduced in 2017, provided startups with online courses and personalized coaching. More than 1500 startups graduated from the program in its first year.[24]

In 2018, Y Combinator announced a new batch of startup schools. After a software glitch, all 15,000 startups that applied to the program were accepted, only to learn a few hours later that they had been rejected.[25] In response to the ensuing outcry, Y Combinator's accepted all 15,000 companies involved in the incident.[26] [27] The same year, Qi Lu, a former CEO of Bing and Baidu, briefly assumed the role of CEO for YC China.[28] In November, YC announced Lu's departure and their decision to not pursue a program in China.[29] YC China later morphed into MiraclePlus, an accelerator similar to YC, with Lu once again at the helm. Geoff Ralston succeeded Altman as Y Combinator's President in 2019.[30] [31]

Adapting to the COVID-19 pandemic, Y Combinator conducted its summer 2020 batch remotely.[32] In January 2022, a revised standard deal of $500,000 was introduced, comprising $125,000 for a 7% equity stake and an additional $375,000 via an uncapped safe mechanism incorporating a Most Favored Nation (MFN) clause.[33] The summer of 2022 saw a deliberate reduction in the startup intake by 40%, from 414 companies to 250.

In January 2023, Garry Tan assumed the positions of president and CEO, succeeding Geoff Ralston.[34] [35] [36] Tan's leadership marked the discontinuation of the YC Continuity growth fund.[37] YC moved its headquarters from Mountain View to San Francisco in the spring of 2023.[38]

In March 2024, Seibel stepped down as managing director.[39]

Garry Tan is looking to raise $2 billion in new capital in 2024 for YC itself.[40]

Programs

Y Combinator interviews and selects two batches of companies per year. The companies receive a total of $500,000 in seed money as well as advice, and connections. The $500,000 in funding is made up of $125,000 on a post-money SAFE in return for 7% equity and $375,000 on an uncapped SAFE with a "most favored nation" ("MFN") provision (i.e.: "we get the same best terms you give anyone else in the next round").[41] Non-profits receive a $100,000 donation.[42] The program includes "office hours", where startup founders meet individually and participate in group meetings. Founders also participate in weekly meetups where guests from the Silicon Valley ecosystem (successful entrepreneurs, venture capitalists, etc.) speak to the founders.

Y Combinator's program is designed to teach founders how to market their product, refine their teams and business models, achieve product/market fit, and scale the startup into a high growth business, etc. The program ends with "Demo Day", where startups present their business and technology prototypes to potential investors.[43]

Y Combinator operates additional programs and a fund designed to support and invest in startups which have already graduated from the main accelerator program. The Series A Program, YC Post-A Program, and YC Growth Program are operated by the same team and focus on helping fast-growing YC startups, and startups raising their Series B funding of $20 million to $100 million.[44] [45]

Y Combinator has introduced additional programs since 2015, including:

As of late 2023, Y Combinator had invested in over 4,000 companies, most of which are for-profit, holding a combined valuation of $600 billion.[59] Non-profit organizations can also participate in the main YC program.[60] Few non-profits have been accepted in the last years, among them Watsi, Women Who Code, New Story, SIRUM, Zidisha, 80,000 Hours, and Our World in Data.[61]

Open Research project

The Human Advancement Research Community (HARC) project was set up with the "mission to ensure human wisdom exceeds human power".[62] [63] The project was inspired by a conversation between Sam Altman and Alan Kay.[64] Its projects include modelling, visualizing and teaching software, as well as programming languages. Members included Alan Kay, Bret Victor, and Vi Hart. Patrick Scaglia was chair of HARC and was listed as an advisor in 2017.[65] [66] YC Research disaffiliated with Y Combinator and now operates as Open Research.[67] [68]

See also

External links

Notes and References

  1. News: Jackson . Christopher . August 5, 2012 . Y Combinator's first batch: where are they now? . en . November 11, 2019 . November 18, 2017 . https://web.archive.org/web/20171118223529/https://thenextweb.com/insider/2012/08/05/y-combinators-first-batch-where-are-they-now/ . live .
  2. Web site: Y Combinator Companies List . en . November 11, 2019 . September 30, 2023 . https://web.archive.org/web/20230930124947/https://www.ycombinator.com/companies/ . live .
  3. Web site: Patel . Nilay . June 8, 2021 . The next generation of startups is remote . July 5, 2021 . The Verge . en . July 7, 2021 . https://web.archive.org/web/20210707154719/https://www.theverge.com/22522731/decoder-podcast-michael-seibel-interview-y-combinator-startups . live .
  4. Web site: Y Combinator Top Companies List – 2019 . en . November 11, 2019 . October 17, 2018 . https://web.archive.org/web/20181017153154/https://www.ycombinator.com/topcompanies/ . live .
  5. Web site: Graham . Paul . March 15, 2012 . How Y Combinator Started . dead . https://web.archive.org/web/20140717042134/http://old.ycombinator.com/start.html . July 17, 2014 . October 22, 2016 . Y Combinator.
  6. Web site: Graham . Paul . January 2009 . California Year-Round . dead . https://web.archive.org/web/20170306095108/http://old.ycombinator.com/ycca.html . March 6, 2017 . October 22, 2016 . Y Combinator.
  7. News: May 16, 2009 . Y Combinator Gets The Sequoia Capital Seal Of Approval . TechCrunch . live . February 10, 2011 . https://web.archive.org/web/20120919215653/http://techcrunch.com/2009/03/16/y-combinator-gets-the-sequoia-capital-seal-of-approval/ . September 19, 2012.
  8. Web site: Rao . Leena . May 21, 2010 . Y Combinator Closes New $8.25 Million Fund, Sequoia Is Lead Investor . live . https://web.archive.org/web/20180915002136/https://techcrunch.com/2010/05/21/y-combinator-closes-new-8-25-million-fund-sequoia-is-lead-investor/ . September 15, 2018 . June 22, 2016 . TechCrunch.com.
  9. Web site: Rao . Leena . February 9, 2013 . Meet Kirsty Nathoo, Y Combinator's Secret Financial And Operational Weapon . live . https://web.archive.org/web/20191103044145/http://techcrunch.com/2013/02/09/meet-kirsty-nathoo-y-combinators-secret-financial-and-operational-weapon/ . November 3, 2019 . January 20, 2020 . techcrunch.com . TechCrunch.
  10. Web site: Arrington . Michael . January 28, 2011 . Start Fund: Yuri Milner, SV Angel Offer EVERY New Y Combinator Startup $150k . live . https://web.archive.org/web/20140211070306/http://techcrunch.com/2011/01/28/yuri-milner-sv-angel-offer-every-new-y-combinator-startup-150k/ . February 11, 2014 . October 22, 2016 . TechCrunch.
  11. Web site: Rao . Leena . November 26, 2012 . Y Combinator's YC VC Will Replace The Start Fund; Includes Yuri Milner, Andreessen Horowitz But Offers Less Money . live . https://web.archive.org/web/20161024023110/https://techcrunch.com/2012/11/26/y-combinator-debuts-yc-vc-to-replace-the-start-fund-includes-yuri-milner-andreessen-horowitz/ . October 24, 2016 . October 22, 2016 . TechCrunch.
  12. Web site: Arrington . Michael . September 1, 2010 . Reddit Cofounder Alexis Ohanian To Join Y Combinator . live . https://web.archive.org/web/20121022142445/http://techcrunch.com/2010/09/01/reddit-cofounder-alexis-ohanian-to-join-y-combinator/ . October 22, 2012 . February 28, 2012 . TechCrunch.
  13. Web site: Graham . Paul . November 12, 2010 . Y Combinator announces two new partners, Paul Buchheit and Harj Taggar . dead . https://web.archive.org/web/20121028025106/http://ycombinator.posterous.com/y-combinator-announces-two-new-partners-paul . October 28, 2012 . February 28, 2012 . Y Combinator Posterous.
  14. Web site: December 3, 2014 . Y Combinator hires first black partner to recruit more minorities . live . https://web.archive.org/web/20200812080358/https://www.usatoday.com/story/tech/2014/12/03/y-combinator-michael-seibel-minorities-silicon-valley-high-tech/19805087/ . August 12, 2020 . August 29, 2020 . USA Today.
  15. Web site: Yeung . Ken . September 6, 2013 . Y Combinator to Fund Non-Profit Startups with Charitable Donations . live . https://web.archive.org/web/20141006091500/http://thenextweb.com/insider/2013/09/06/following-watsi-y-combinator-to-now-fund-non-profit-startups-in-the-form-of-a-charitable-donation/ . October 6, 2014 . October 1, 2014 . The Next Web.
  16. Web site: Y Combinator Companies. Y Combinator.
  17. Web site: Graham . Paul . February 21, 2014 . Sam Altman for President . live . https://web.archive.org/web/20170325040953/http://blog.ycombinator.com/sam-altman-for-president/ . March 25, 2017 . October 22, 2016 . Y Combinator.
  18. Web site: April 23, 2014 . Y Combinator's 'New Deal' for startups: More money, same 7% equity . live . https://web.archive.org/web/20161129043259/http://venturebeat.com/2014/04/22/future-y-combinators-new-deal-more-money-but-still-for-7-in-equity/ . November 29, 2016 . November 29, 2016 . VentureBeat.
  19. Web site: Altman . Sam . December 8, 2014 . Transcriptic for YC biotech startups . live . https://web.archive.org/web/20161018202223/http://blog.ycombinator.com/transcriptic . October 18, 2016 . October 22, 2016 . Y Combinator.
  20. Web site: Altman . Sam . February 5, 2014 . YC for Hardware . live . https://web.archive.org/web/20150207064007/http://blog.ycombinator.com/yc-for-hardware . February 7, 2015 . October 22, 2016 . Y Combinator.
  21. Web site: Modgil . Shweta . August 16, 2016 . YCombinator Is Coming To India This September; Here's Why You Should Be Excited . live . https://web.archive.org/web/20160817174801/https://inc42.com/buzz/ycombinator-coming-to-india/ . August 17, 2016 . September 10, 2016 . Inc 42.
  22. Web site: Y Combinator Companies - OpenAI. Y Combinator.
  23. Web site: Schubarth . Cromwell . September 13, 2016 . Y Combinator names new leaders as it changes shape again . live . https://web.archive.org/web/20161011225026/http://www.bizjournals.com/sanjose/blog/techflash/2016/09/y-combinator-names-new-leaders-as-it-changes-shape.html . October 11, 2016 . October 18, 2016 . Silicon Valley Business Journal.
  24. Web site: Constine . Josh . June 16, 2017 . 1500+ startups graduate Y Combinator's first online Startup School . live . https://web.archive.org/web/20200809060211/https://techcrunch.com/2017/06/16/startup-school/ . August 9, 2020 . April 13, 2020 . TechCrunch.
  25. Web site: August 21, 2018 . Y Combinator accepts 15,000 startups into its online school after software glitch causes confusion . live . https://web.archive.org/web/20180822081113/https://venturebeat.com/2018/08/21/y-combinator-accepts-15000-startups-into-its-online-school-after-software-glitch-causes-confusion/ . August 22, 2018 . August 22, 2018 . VentureBeat.
  26. Web site: August 20, 2018 . Startup School: Every Company that Applied is Now Accepted . live . https://web.archive.org/web/20200617182218/https://blog.ycombinator.com/startup-school-every-company-that-applied-is-now-accepted/ . June 17, 2020 . April 16, 2020 . Y Combinator Blog.
  27. Web site: Schleifer . Theodore . Y Combinator accidentally let 15,000 people into an exclusive program . Vox . 2019-02-27 . 2023-12-26.
  28. Web site: August 15, 2018 . Y Combinator is launching a startup program in China . October 27, 2019 . TechCrunch . en-US.
  29. Web site: An update on YC China . live . https://web.archive.org/web/20191121184653/https://blog.ycombinator.com/an-update-on-yc-china/ . November 21, 2019 . October 27, 2019 . Y Combinator . en-US.
  30. Web site: Altman . Sam . Geoff Ralston for President . live . https://web.archive.org/web/20190617034816/https://blog.ycombinator.com/geoff-ralston-for-president/ . June 17, 2019 . June 17, 2019 . Y Combinator . en-US.
  31. Web site: March 8, 2019 . Y Combinator president Sam Altman is stepping down amid a series of changes at the accelerator . September 9, 2020 . TechCrunch . en-US.
  32. Web site: Seibel . Michael . April 20, 2020 . YC S20 Remote Batch . live . https://web.archive.org/web/20200421073317/https://blog.ycombinator.com/yc-s20-remote-batch/ . April 21, 2020 . April 21, 2020 . Y Combinator.
  33. Web site: Mascarenhas . Natasha . August 2, 2022 . Y Combinator narrows current cohort size by 40%, citing downturn and funding environment . live . https://web.archive.org/web/20220915064656/https://techcrunch.com/2022/08/02/y-combinator-narrows-current-cohort-size-by-40-citing-downturn-and-funding-environment/ . September 15, 2022 . September 15, 2022 . TechCrunch . en-US.
  34. Web site: Welcome Home, Garry Tan . 2023-07-19 . Y Combinator . en.
  35. Web site: Y Combinator Names Venture Capitalist Garry Tan As Its Next President . live . https://web.archive.org/web/20230225005410/https://www.forbes.com/sites/alexkonrad/2022/08/29/y-combinator-names-garry-tan-as-next-president/ . February 25, 2023 . February 24, 2023 . Forbes . en-US.
  36. Web site: Mascarenhas . Natasha . 2022-08-29 . Garry Tan's return is a full circle moment for Y Combinator . 2023-07-19 . TechCrunch . en-US.
  37. Web site: Y Combinator to End Late-Stage Startup Fund, Lays Off Staff . 2023-08-03 . The Information.
  38. Web site: Mathews . Jessica . January 12, 2024 . Garry Tan says founders 'have to be in San Francisco' as Y Combinator ditches Mountain View headquarters for the big city . Yahoo! Finance . Fortune . https://web.archive.org/web/20240113102744/https://finance.yahoo.com/news/garry-tan-says-founders-san-123939439.html . January 13, 2024 . live.
  39. News: Levy . Steven . Y Combinator's Chief Startup Whisperer Is Demoting Himself . 17 March 2024 . . 15 March 2024.
  40. Web site: Konrad . Alex . Y Combinator Is Raising Billions In New Funding . 2024-04-01 . Forbes . en.
  41. Web site: The Y Combinator Standard Deal . 2023-07-10 . Y Combinator . en.
  42. Web site: Nathoo . Kirsty . January 2022 . The New Deal . live . January 16, 2022 . Y Combinator . January 16, 2022 . https://web.archive.org/web/20220116080437/https://www.ycombinator.com/deal/ .
  43. Web site: Graham . Paul . June 2014 . What happens at YC . May 8, 2013 . Y Combinator . March 3, 2020 . https://web.archive.org/web/20200303091543/https://www.ycombinator.com/atyc.html . live .
  44. Web site: Y Combinator Continuity . October 18, 2021 . October 18, 2021 . https://web.archive.org/web/20211018052441/https://www.ycombinator.com/continuity/ . dead .
  45. Web site: YC Growth Program . October 18, 2021 . October 18, 2021 . https://web.archive.org/web/20211018052442/https://www.ycombinator.com/growth-program . dead .
  46. Web site: Loizos . Connie . July 20, 2015 . Y Combinator Just Introduced a New Program to Reach Up to "1,000" Companies Per Year . July 21, 2015 . TechCrunch . July 21, 2015 . https://web.archive.org/web/20150721024115/http://techcrunch.com/2015/07/20/y-combinator-just-introduced-a-new-program-to-reach-up-to-1000-companies-per-year/ . live .
  47. Web site: January 14, 2021 . Y Combinator . live . January 14, 2021 . October 17, 2018 . https://web.archive.org/web/20181017153154/https://www.ycombinator.com/topcompanies/ .
  48. Web site: Fellowship V2 . live . https://web.archive.org/web/20160129070644/http://blog.ycombinator.com/fellowship-v2 . January 29, 2016 . January 27, 2016 . Y Combinator Posthaven.
  49. Web site: September 13, 2016 . With a new CEO, Y Combinator will wind down fellowships and start a MOOC . September 9, 2020 . TechCrunch . en-US.
  50. Web site: Y Combinator to End Late-Stage Startup Fund, Lays Off Staff . 2023-08-03 . The Information.
  51. Web site: Yeung . Ken . October 8, 2015 . Sam Altman commits $10M to start Y Combinator research lab . VentureBeat . September 18, 2017 . June 11, 2017 . https://web.archive.org/web/20170611234849/https://venturebeat.com/2015/10/07/sam-altman-commits-10m-to-start-y-combinator-research-lab/ . live .
  52. Web site: Newton . Casey . October 7, 2015 . Y Combinator is launching its own in-house moonshot group . The Verge . September 18, 2017 . November 7, 2017 . https://web.archive.org/web/20171107005258/https://www.theverge.com/2015/10/7/9473703/y-combinator-research . live .
  53. Web site: YCR is a non-profit research lab . October 22, 2016 . Y Combinator Research . June 11, 2016 . https://web.archive.org/web/20160611042811/https://ycr.org/ . live .
  54. Web site: Cheung . Adora . New Cities . November 26, 2017 . November 16, 2017 . https://web.archive.org/web/20171116074421/https://blog.ycombinator.com/new-cities/ . live .
  55. Web site: Michael Nielsen . March 27, 2019 . michaelnielsen.org . April 9, 2019 . https://web.archive.org/web/20190409220626/http://michaelnielsen.org/ . live .
  56. Web site: Altman . Sam . October 7, 2015 . YC Research . October 22, 2016 . Y Combinator Posthaven . October 29, 2015 . https://web.archive.org/web/20151029062019/http://blog.ycombinator.com/yc-research . live .
  57. Web site: Combinator . Y. . Updates from YC . live . https://web.archive.org/web/20190310142852/https://blog.ycombinator.com/updates-from-yc/ . March 10, 2019 . March 11, 2019 . Y Combinator . en-US.
  58. Web site: Kawamoto . Dawn . March 11, 2019 . Venture capital powerhouse is latest Silicon Valley firm to open San Francisco office . March 16, 2019 . . March 21, 2019 . https://web.archive.org/web/20190321113551/https://www.bizjournals.com/sanfrancisco/news/2019/03/11/venture-capital-andreessen-horowitz-y-combinator.html . live .
  59. Web site: Y Combinator. Y Combinator.
  60. Web site: Graham . Paul . September 2013 . YC Will Now Fund Nonprofits Too . October 18, 2016 . Y Combinator . September 18, 2018 . https://web.archive.org/web/20180918182950/http://www.ycombinator.com/nonprofits/ . live .
  61. Web site: March 19, 2019 . Here are the 85+ startups that launched at YC's W19 Demo Day 1 . July 9, 2019 . TechCrunch . en-US.
  62. Web site: Research . Y Combinator . HARC . harc.ycr.org . November 26, 2017 . December 1, 2017 . https://web.archive.org/web/20171201034619/https://harc.ycr.org/ . live .
  63. Web site: May 11, 2016 . Y Combinator launches new 'Human Advancement Research Community' . November 26, 2017 . December 1, 2017 . https://web.archive.org/web/20171201034421/https://www.fastcompany.com/4006988/y-combinator-launches-new-human-advancement-research-community . live .
  64. Web site: May 11, 2016 . Y Combinator Research launches Human Advancement Research Community, Alan Kay participating . November 26, 2017 . December 1, 2017 . https://web.archive.org/web/20171201041016/https://venturebeat.com/2016/05/11/y-combinator-research-launches-human-advancement-research-community-alan-kay-participating/ . live .
  65. Web site: Altman . Sam . HARC . November 26, 2017 . October 12, 2017 . https://web.archive.org/web/20171012183943/http://blog.ycombinator.com/harc/ . live .
  66. Web site: November 26, 2017 . Members . https://web.archive.org/web/20171126184959/https://harc.ycr.org/member/ . November 26, 2017.
  67. Web site: YC Research, now OpenResearch, and its portfolio of research projects are no longer affiliated with Y Combinator . March 6, 2023 . ycr.org . June 11, 2016 . https://web.archive.org/web/20160611042811/https://ycr.org/ . live .
  68. Web site: OpenResearch . May 19, 2022 . openresearchlab.org . May 19, 2022 . https://web.archive.org/web/20220519053653/https://www.openresearchlab.org/ . live .

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