

YC Reject - We've been offered an investment to fund our Summer 2011 class - allanscu
http://www.ycreject.com/2011/04/yc-reject-has-been-approached-with.html

======
dclaysmith
I was amazed by how motivated I became by being involved in the "November
Startup Sprint" back in the fall so I think a more formal program could
potentially be pretty cool. I'd move away from being a "YC Reject" program to
a "Hacker News Startup Co-op".

I would open it up after interviews so that those who got interviews but don't
get accepted can participate.

Accomodate all groups who want to participate and don't mess with the
financing at this point. The financing talk gives me kind of a "no" feeling.

Have your weekly dinners and get speakers.

Have a web site where YCR startups can promote their projects.

Schedule and hold a Demo Day. I bet you'd be able to get a few investors to
drop by or else watch the videos that will go up on the YCR web site.

By banding together, I think everyone will have a really productive 3 months,
get to know alot of like-minded individuals, and have a decent shot at
attracting some investor interest.

I live in Ireland and wouldn't be able to participate but I think it's a great
idea.

~~~
ph0rque
_I'd move away from being a "YC Reject" program to a "Hacker News Startup Co-
op"._

How about "Peer-to-peer Startups"?

------
phamilton
There was an article a month or two ago about the problems with tech
accelerators gaining popularity.

I can't find the link but it basically said the accelerator bubble is going to
happen when the secondary groups get the 'B' talent startups, and then the
next groups get the 'C' talent...

While I have no idea about the quality of YC Reject groups, this does kinda
have that same feel to it.

~~~
brown9-2
A group of "B" talent or "C" talent startups get funded - so what?

The only people who lose out are the investors, who have plenty of chance to
evaluate their investment before making a decision (I imagine), so they can
only blame themselves for making a bad investment.

~~~
cliftonmckinney
Seconded. The economics probably make sense even if 90% are "Cs." One or two
winners per batch is enough given the relatively small investment for the
relatively large stake. Keep in mind that these investments typically result
in an initial valuation of somewhere around $300 - $500k. 6% of something that
size for relatively low cost makes room for quite a few losers. My only advice
is to make sure that there's a lot of focus on getting great advisors and
mentors for the program. That piece is easily as important as the funding.

------
entangld
I have a name for it (I love naming things):

ReCombinated

~~~
lazerwalker
My name suggestion: ZCombinator (one more than Y)

------
Skywing
I've never been accepted into YC so this may be totally wrong, but ...

Don't lose sight of the real value in this for a group trying to create their
own startup - the mentorship, fraternity, alumni network, initial amount of
funding and then finally the demo day presentations which will result in a lot
of visibility. Not to mention, at this point in time, the YC brand stamp. I
know you have to start somewhere, but I don't think starting with investors is
the right move. It won't be difficult to find people willing to invest, as
you've already experienced (they came to you). You need to start by trying to
provide the startups with the things they can't get on their own - mentorship,
fraternity, etc. I have gone through my own adventures of pitching my ideas to
VCs, while being completely uneducated about it and green, and I can say it's
not difficult to get money from them - so you will be able to get it when its
required. At least for me, the money is not really the appeal of YC.

I think dclaysmith says it well here:
<http://news.ycombinator.com/item?id=2432040>

------
phamilton
Crazy stuff. Can you imagine the analog in other professions?

"I got rejected from Harvard Law School. So I got a couple of my fellow
applicants together and decided to study law together for 3 years, sans
professors. We all just got 6 figure offers from the big firms on Wall
Street."

~~~
davidw
Here is a list of companies that didn't go through YCombinator and did pretty
well: Microsoft, Google, Facebook, Cisco, Amazon.

So I think the 'sans professors' thing is a bit unfair.

~~~
phamilton
And Abraham Lincoln went 'sans professors'.

I didn't mean to bash. I merely meant to accentuate how unique the
situation/industry is.

------
aaronrc
I know it's been said over and over but why don't all these YC and now YC
rejects just get on with it. Build their products, start their businesses and
make some money. Why the obsession with being a YC'er and now a not-a-YC'er.
Can't they see the whole thing is just a distraction from their already
difficult task?! nikcub hit the nail on the head with his comment, it's just a
shame YC doesn't lend itself to a plithy title such as "Boo Hoo"
(en.wikipedia.org/wiki/Boo.com).

~~~
robryan
Well having a support group and something structured like weekly meetups to
drive the startup forward week to week seems like a good thing to me. I don't
think it's so much a YC obsession but an obsession with giving a startup the
best possible chance to succeed.

------
nikcub
in ten years time when the social software era zeitgeist is written it will
definitely mention 'and even a YC reject group was funded'

~~~
danohuiginn
Bar Camps began as an alternative to O'Reilly's Foo Camp, for those who
weren't invited. Now there are barcamps almost every weekend, in a dozen or
more countries.

If nothing else, the rejects (always) have force of numbers on their side.

~~~
nikcub
I don't have a problem with it at all, it is interesting and unusual

He put so much effort and determination into this 'not-YC' that he probably
would have been funded anyway

Being rejected from YC will probably end up being the best thing that has ever
happen to him

------
adsahay
This is one of the crazy things I've come across - one moment there's a call
for YC rejects to hang out together, next day there's cash for equity! Since
this is an experiment maybe it would help to keep it simple in the original
form and leave investment out of it till the end of summer?

~~~
allanscu
What about the quality of the applicants? Will the better candidates not
bother with this project since no money is involved?

~~~
adsahay
It would be interesting to diff the original applications and those after the
money announcement to gauge the interest and quality. I think quality startups
will want to reach a certain level (prototype, proof of concept) and then
money will find them. The blanket offer for investment without knowing the
startups or prior relationships is a bit too good to be true?

------
kevinburke
At this point though, if we're taking PG & co's rankings of applications, the
top 10% of YC applicants are still in the interview phase - if I were the OP I
would want to wait until after the class gets announced, right?

------
adora
From who? That seems pretty important.

~~~
allanscu
For purposes of full disclosure, I was approached by an individual angel and I
sat down with the investor for a meet and great. The selection process needs
to be sorted out and the term sheets need to be agreed upon by all parties
before it's finalized and a check is written.

The reason I posted this blog, is because I want to get candidate feedback.
The money involved in YC is just a small (but helpful part) of what they do.
Will teams that participate in this grassroots project want to give up 6% of
their company? What are your thoughts?

~~~
kovar
The money was a very small part of YC's appeal for me. Access to the mentors
and other human capital was the real draw. I can't see giving up 6% of my
company if the program doesn't offer human capital similar to YC's.

------
russ
Someone should get started on the 'YC Reject Reject' fund.

------
JCB_K
The thing is, with YC you get except the 20 grand or whatever it is, the
advice from pg and others, and the alumni network, which is both worth
something.

~~~
allanscu
With 40-50 groups now your time spent with him as a YC'er is significantly
less. He's added staff, but scaling out his time is a big problem. Plus with
the 40-50 groups - I can only imagine that the demo days are a complete
circus. Will angels continue to invest their money in what essentially has
become a meat market? If I were to invest my money on a high-risk venture I'd
like to get a little T.L.C.

~~~
SwellJoe
The last YC batch was the smallest in a while (I believe it was well under
20). I don't believe they've continued to grow the size of the batches. I'd be
shocked if they ever grow to 40-50 groups. That many wouldn't fit in the YC
office for the dinners. Where are you getting this "40-50 groups" number from?

"Will angels continue to invest their money in what essentially has become a
meat market?"

The evidence seems to indicate that the answer is "yes".

"If I were to invest my money on a high-risk venture I'd like to get a little
T.L.C."

Personally, if I were an investor, I'd rather get a little R.O.I.

~~~
ericd
The last batch had 43 groups (see ycombinator.com).

~~~
SwellJoe
Wow. That's too many.

~~~
iamwil
Actually, it's a bit more than 43.

I think alumni will always think the subsequent batches are too many.

------
davidw
"We're like YC but better!" has "sour grapes" written all over it. If it's
that much better, why did you bother applying to YC in the first place?

Also, on a lighter note, will there now be a ycrejectrejects project/site?

~~~
abbasmehdi
YC came out of an unmet need as well, VCs not finding at the seed stage.

~~~
davidw
What's that got to do with anything? My point was that by defining themselves
in terms of "not ycombinator" it doesn't look good.

I'd much rather read about an "independent, peer-based company building
support group" or something like that.

~~~
abbasmehdi
They haven't defined anything yet, this is just the first few days, everything
is up for adjustment, not getting in YC is driving them, if this works it will
have to change to work as you're suggesting.

------
jasonlbaptiste
The original idea had something special and different. Now this is really just
another accelerator.

~~~
allanscu
The money is only a small part of it. It's really there to make sure you can
focus on your project and not worry about putting food on your plate or making
rent. The money was put on the table, but I'd like to get feedback to know if
it's something that interested teams would want in exchange for equity.

~~~
marcomonteiro
The money to me was important as well as everything else YC offered. I
wouldn't have applied otherwise. I can't afford to build my business without
the seed money at this point. So it's either find a job, go back to school
and/or look for funding elsewhere.

------
mwhite
If YC Reject groups get similar funding, this might be a good way to
empirically test whether either Y-Combinator succeeds at choosing more capable
groups or Y-Combinator offers advantages over other accelerators.

~~~
kovar
I wish I could agree, but I do not. There are way too many variables. To even
get close to making a valid test you'd need to run the same startups through
different accelerators at exactly the same time.

~~~
phlux
I guess it is more a test of how the money affects the startup vs. the
mentorship/network.

------
rrhoover
My initial thought is to leave investment/equity out of the program and stick
to the original vision. There are dozens of established incubator programs
that have a reputation and history of performance.

------
selvan
Accepted applicants articulated their idea & company better than non-accepted
applicatns as per YC scale. If you aren't accepted by YC, shouldn't it be same
as getting rejected from a VC?. In most cases VCs are investing in companies
that are rejected by other VCs. How one perceives opportunities for an
idea/investment, is very subjective. YC and YC Reject will not be same even
though offer is similar ($12,000-20,000 for about 6% of the company).

------
marcamillion
WoW.....I don't want to say bubble....but this sure seems like some sort of
frenzy.

Kudos to you for taking the initiative and doing what you need to do...and for
siezing what could potentially be an amazing opportunity.

I hope it doesn't turn out to be a fad, and something sustainable can be built
here.

------
marcamillion
YC Reject could turn out to be an interesting development just based on the
way YC does self-selects for a 50/50 success ratio.

See more here: <http://news.ycombinator.com/item?id=2431712>

------
hotpockets
I was going to try something similar a while back. Perhaps a different persons
perspective on a similar idea will stimulate your mind:
<http://news.ycombinator.com/item?id=925134>

------
falsestprophet
This is an invitation for a trademark infringement lawsuit.

------
adrianwaj
Where's the accompanying news.arc?

------
zyfo
This is insane and hilarious, as well as a great initiative.

------
abbasmehdi
Could this be a scheme to look at everybody's applications? Why would the
angel not directly go to YC demo day or ask them for the reject list? When
desperate it is easy to lose sight of what is plausible.

Please don't get me wrong, I am not calling you a liar, but this is just
healthy skepticism. If I were to ever go along with this I would need to see
some written proof.

If you have actually done this you're doing a great service to a lot of
people.

~~~
allanscu
That's a fair question. Without knowing me, it's hard to gauge my integrity.
If you have any questions, I'll be happy to speak with you.

~~~
abbasmehdi
Thanks for keeping an open mind! :)

