

What Would A Chicago-style Y Combinator Look Like? - pchristensen
http://www.pchristensen.com/blog/articles/what-would-a-chicago-style-ycombinator-look-like/

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tptacek
It wouldn't work.

There are plenty of companies around here who could swing the money to fund
YC-sized groups at YC-sized investments. But YC is extracting 6% from
promising startups for the same reason that 37signals is extracting millions
of dollars for a web-based bulletin board: the total package is compelling.

In YC's case, you're getting access to a hands-on software startup fanatic
who's words you already hang on, plus the network of VC's his team has built
up over the last N years. Part of the YC pitch, whether Graham says it or not,
is that it ends in a showcase "demo day" which seems to improve your odds of
scoring an "angel round". And in Autumn of '09, it's hard to get around the
brand value that YC has. Getting "accepted" into YC is a marketing win.

I don't think cloning YC is a smart play for Chicago. It's possible to not
_like_ what YC stands for: the notion, implied or stated, that starting a
company is similar to applying for college. There's got to be another way to
nurture startups in Chicago, one better suited to the climate that we have
here: hard workers flying under the radar independent of financiers and other
gatekeepers.

Maybe there's some kind of umbrella contracting thing that we can come up
with.

~~~
plinkplonk
"It wouldn't work. ....

But YC is extracting 6% from promising startups for the same reason that
37signals is extracting millions of dollars for a web-based bulletin board:
the total package is compelling.

In YC's case, you're getting access to a hands-on software startup fanatic
who's words you already hang on, plus the network of VC's his team has built
up over the last N years. "

which is why the "Indian
Y-Combinator"(<http://news.ycombinator.com/item?id=842150>) will (eventually)
fail as well.(besides the fact that they won't attract smart people with stuff
like how they micromanage the 10,000$ they _might_ give you for 10% of your
company - Founders can't operate the bank account, and apparently need a board
meeting to decide on line item expenses! See
<http://news.ycombinator.com/item?id=842882> for details).

Cloning the legal/financial structure isn't enough. YC succeeds because it has
very high calibre people leading it, not because it has a specific "algorithm"
that others can copy.

~~~
catone
"YC succeeds because it has very high calibre people leading it, not because
it has a specific "algorithm" that others can copy."

Why are you assuming the "algorithm" just includes the finance bits? It also
includes the people involved (mentors, investors, community). Why wouldn't
that be replicable in other cities outside the Valley? As long as they have
both the financial capital _and_ the social capital I don't see why it
couldn't be successfully duplicated.

TechStars seems to be doing well in Boulder and Boston. Seedcamp seems to be
doing well in London. Launchbox seems to be doing pretty well in DC. DreamIt
seems to be working well for Philly. Someone could do it in Chicago (or any
other moderately sized city with some semblance of a tech community already,
some willing investors (or the ability to attract investors from other parts
of the world), and a few nearby universities) with the right network.

~~~
pg
Obviously something like YC could in principle work outside the Valley,
because YC itself used to be. We had to fly startups from Boston cycles to
present to investors in Silicon Valley, though, and the more prominent clones
do as well, so I think you have to take that as a given.

Probably the biggest disadvantage for startups in Boston cycles was the
scarcity of experienced founders there. In our Boston cycles, we considered
ourselves lucky to get 2 or 3 speakers of the caliber we get in SV cycles
(<http://ycombinator.com/w9speakers.html>). I would guess this problem is even
worse in other towns.

------
sachinag
There are a number of us who love the city and shake their heads about how
unsupportive it is for tech startups. (I examined the claim with data:
[http://www.sachinagarwal.com/illinois-so-called-tech-
leaders...](http://www.sachinagarwal.com/illinois-so-called-tech-leaders-have-
failed-t))

At the end of the day, if you can't get angel money - and I reiterate, _there
is no active angel money in Chicago_ , only a bunch of self-proclaimed angels
that don't cut checks - a YC-style program won't work. What's the point of
having a program in Chicago, or Cambridge, or Northern Virginia if you have to
fly everyone out to the Valley anyway for a Demo Day?

If you can forswear ever, ever raising money, sure, do your company here.
Chicago's the best city on earth. But if you need the option value of maybe
raising money someday, you should go West. (And if you want to start a YC
company, contact me. I'm in the market for a technical co-founder for the
Winter 2010 batch.)

------
rms
IllinoisVENTURES is still going, as far as I know. IllinoisVENTURES
iVentures10. iventures10.com

They are the only YC pseudo-clone that I have heard actual horror stories
about. They give terrible deals to the academics commercializing research they
normally fund and can be outright abusive with the micro seed stage program.
Stay away.

~~~
pg
They were the first, actually. I didn't know for sure if they were still going
though.

------
wglb
The article is correct in noting that there is a huge tech community in the
chicago area. Some of it is rather unique in the financial sector--trading,
options, financial (more so than new york).

But as a distant observer to YC, isn't a key factor in YC's success the
culture of the surrounding community (as indicated by the move from Boston,
which is certainly more high-tech than Chicago to the valley) and the
particular knowledge that YC has in doing this sort of thing?

And from what I have read of Jason's posts, he doesn't seem to think that
building a company to be acquired is what he would recommend (in particular,
his post regarding the selling of mint to quicken). I would think that would
be part of what a YC-like outfit would need to have in its bag of tricks.

And, from a distance, there just seems to be this startup fever in the valley,
not something that is really evident here in the chicago area.

~~~
wushupork
I tend to agree with this user. I don't think there is a startup culture or
mentality here in Chicago. Most people who want to start tech startups move
out to CA.

------
jrockway
I think YC probably takes all the people interested in something like YC
already, so starting something else "like" it won't ever be successful. It's
not about the location, it's about the connections that YC has.

Otherwise, Chicago is a fine place for an Internet-based startup. We have
Internet access just like San Francisco :)

~~~
tptacek
It's a really bad place from which to seek funding, YC or not. Sachin
overemphasizes the Chicago financing community, but it's worth knowing that
most VCs, even outside Sand Hill and Waltham, aren't going to be happy funding
a company in Chicago.

And they're right. It's easier to flip a company in San Mateo, where a bizdev
meeting is just a 15 minute drive to Palo Alto, than it is in Chicago where
the same meeting is a 3-day trip arranged 2 weeks in advance.

It's just not easier enough to matter for a founder, who is so unlikely to get
a real round in the first place, and then so unlikely to get the B round, and
then so unlikely to wind up with something that can be flipped at a huge
profit, that this is just not something worth optimizing for. That's
hyperbole, of course, but not by much.

~~~
sachinag
If you have data that proves that I've overemphasizing how bad financing is
here, please provide it. I am more than happy to consider additional data.
Being able to provide a HOWTO that's more than "for God's sake, move to the
Valley" would make me thrilled.

~~~
tptacek
I think there's more to it than this point, but I'll the easy argument to
articulate here is, "you can get funded as a company domiciled in Chicago by a
firm or investor that isn't local to Chicago".

~~~
sachinag
Well, sure. But I believe that the traction/revenue/user bar to do so is much
higher here than it is in a more robust funding environment. Also, it's much,
much harder to get a deal syndicated here.

------
rrival
ITA tried this with ILcelerate:

<http://ilcelerate.wordpress.com/>

And it doesn't look like there's going to be a 'second' annual ilcelerate =)

