Why you should apply for Y Combinator?
As a startup founder, scaling your business may seem like a daunting and almost impossible task. Raising rounds of capital from different investors can help you get the financial and communal support needed for your startup to thrive, however, it’s much easier said than done.
The easiest way for founders to learn how to grow their business is to apply to “accelerators,” which are essentially intensive educational programs aimed at expediting ideation and business development. Through accelerators, founders learn how to sharpen their business models, strengthen their pitching skills, while also gaining seed funding.
While thousands of accelerators exist around the globe, there truly exists no other experience like that of Y Combinator (YC) for startups looking to grow.
Here are six reasons why I believe that ambitious startup founders should heavily consider applying to a YC batch!
- YC forces founders to create a productive work structure
Foremost, YC’s rigorous education model differs from most other accelerators and pushes founders to focus on their strategic vision. YC’s 3 month intensive program is not for the faint of heart. Airbnb founder Brian Chesky noted that when he went through the accelerator, his weeks had been structured in a way that he woke up at 8 AM and worked till midnight everyday. While there are usually only about 4 hours of YC events a week, the mentorship he received through the program instilled in him the motivation to “nonstop” grind for 3 months.
- Through this structure, founders help find a Product Market fit
Chesky furthers that through YC, he was able to speed up Airbnb’s ideation process and establish a clear “product market fit” – a startup philosophy popularized by Marc Anderssen that highlights that the most successful startups don’t have the best teams or products, but rather a product that can serve a specific market with potential for tons of hungry customers. The partners at YC believe that companies with a product market fit are the most valuable type of early-stage startup, and through conversations with mentors at the program, founders are forced to change their pre-existing ideas and business models to strengthen their PMF.
- YC hones an Independent learning model
Founders articulate that the program is not “school-like” compared to other top accelerators in the nation, but instead is built on a cyclical model of listening to advice from other founders and YC partners and implementing them on your own time – a self-directed model that proves successful only when founders take initiative themselves to mentally commit to growing their business. By utilizing YC’s network of over 4000 funded startups and tens of thousands of alumni, all who are open and receptive to challenging your worldview and strategic vision, founders have access to the insights of past companies that they can utilize to their own benefit. While the program won’t teach founders how to create a billion dollar business directly, its emphasis on product market fit helps ambitious founders tailor and simplify their startups to address important markets.
- Funding designed specifically for startups
An important benefit of YC’s selectivity is access to the accelerator’s plentiful and supportive financing opportunities. Once accepted to the program, all founders receive $125,000 for 7% equity in their company, with an additional $375,000 in uncapped SAFEs – which are a financial tool that allows startups to receive extra investment without taking on debt and is converted when the startups is functionally able to offer more equity or repay the note. Essentially, SAFES are optimal for startups as they grant founders extra capital without the burden of excess debt.
- YC skyrockets startup valuations
YC funding does more than just help support a startup's internal operations. Companies backed by YC had valuations about 2-3x the size of that of their similar-stage peers, highlighting a clear prestige factor associated with the accelerator that attracts the attention of investors at a higher rate. While the seed funding from YC themselves may be helpful, most YC startups have immense success in reaching further financial success – with 39% reaching Series A, 18% reaching $100M, and 90+ reaching billion dollar valuations.
- Exclusive deals + partnerships with other YC-backed companies
Another impact aspect of financial support exclusive to Y combinator are the numerous set deals on the products and services of YC-backed companies. YC’s batches are filled with various offerings that can help simplify your business model and cut operational costs. Once entering the YC ecosystem, startups often receive free or heavily discounted rates on former YC products that can streamline their banking, cap table management, or management services. Savings can reach up to $500,000 from these deals, which can be imperative for startups looking to fix issues on their balance sheet or direct more money away from menial tasks and into their growth operations.
There are various networking and financial benefits of participation in Y Combinator. While selection rates for batches hover around 1-2%, those lucky few who are chosen to join are rewarded with incentives that greatly help narrow their strategic vision into a specific product market fit and also finance this vision with minimal risk. To put it briefly, it is in the best interest of any founder – no matter what industry or niche their startup operates in – to apply to YC, as the abundant resources and disciplined vibe of the program truly generate extensive and optimistic results for its members.