

Ask YC: Attack of the clones; would you take your start-up to a YC Clone? - lemonysnicket

There's the original, YC<p>Techstars<p>DreamItVentures in Philly<p>Launchbox Digital in DC<p>It seems like a lot of founders from the other YC-knockoffs participate on HN -- care to share your experiences?<p>Hackers, would you take your start-ups to one of the clones? Why or why not?
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SwellJoe
TechStars, as bizarrely and counter-productively obsessed with YC as they seem
to be, has actually produced a couple of winners now. It's not the kind of hit
rate that YC has exhibited...or had exhibited at this stage in YC's life. But
it, at least, has some measurable success.

Given that there are cheaper sources of funding, and most of them have no
track record and extremely limited credibility, I would look much deeper...and
consider other alternatives. Charles River has an early stage arm that does a
lot of deals, for example, and has a good reputation. Angels are another
option. While this "new model" of investing is compelling for its high success
rate, when executed by YC, it's not necessarily the best way to raise money.
We took money from YC and have never had any regrets about it...but I can't
think of _any_ other situation where we'd give up that much equity for that
little money. But, you'd have to decide that for yourself.

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wehriam
What is YC's hit rate? What is TechStar's hit rate?

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SwellJoe
I already mentioned TechStars hit rate, as far as I know it: "has actually
produced a couple of winners now", in the form of two small acquisitions.

YC has had a couple of pretty big acquisitions and five (I believe) small
acquisitions. More importantly, I think there are at least three or four still
on-going companies that will be very large successes for YC. I won't name
them, as it might imply that I think others won't be big successes or it might
start a flame war over "no way that blah blah idea can generate significant
revenue, no matter how many million hits they get", or whatever.

And the "at this stage" bit was in reference to the fact that about 50% of the
first batch of YC founders are now rich, by a reasonable definition of "rich".
Each batch since then rolls off a bit, in percentages, but the bets are
getting bigger and take longer to play out (our company, for example, would
not be for sale for a low millions acquisition offer...but the vast majority
of the exits for YC and TS companies have been in that range...and I know that
a few other YC companies are also looking to build larger companies than
that).

Anyway, by any metric YC has a lot of successful companies in their stable.
Traffic for a few YC companies is just through the roof (Scribd, Justin.TV,
Weebly, Reddit, Disqus, probably others). A couple of others have really
impressive reach outside of the usual Web 2.0 set and into the "real world"
(Loopt, in particular, though Inkling Markets is everywhere, too... _my dad_
has used Inkling's product, and he just got broadband for the first time last
week).

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animalcrackers
went to one of the YC clones.

the biggest problem with these YC clones is two-fold.

first, most of the clones' founders have a)either not founded a start-up
b)founded a start-up in a completely different field.

second, the lack of technical ability isn't the most conducive, to, ya know,
doing a start-up in the early stages based entirely on code. ideas from the
founders are pretty much fluff, because they don't understand rudimentary
concepts of code, what can and cannot be done, how long things could possibly
take, etc.

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trapper
Its like asking whether you would go to a VC instead of sequoia. Of course you
would.

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SwellJoe
Really? I don't think I understand how this follows.

Alternatives to YC _include_ Sequoia, angels, other VCs, etc. and not just YC
clones. It's an expensive source of money, and if the company isn't delivering
a lot of extra value (which YC has consistently been shown to do, and none of
the others, with the _possible_ exception of TechStars, has shown that) it's
probably a bad deal.

And, as for "would you go to a VC instead of Sequoia"...yes, but I wouldn't go
to a VC that I have no knowledge of, and that has no track record. I'd accept
money from a top ten VC (assuming reasonable terms and consonance of vision),
but I'd rather build a company on its own revenues than take money from an
investor I don't believe in, or I don't believe is capable of grokking our
long term vision for the company.

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trapper
Honestly, has YC actually been shown to consistently add value? I thought the
jury was out on that, until we get stats about success rates. Given how many
companies they fund, how much time do they actually spend with each company?
How do they scale the model without diluting experience?

Most VC's, even poor ones bank on 2/10 paying for the failures, otherwise they
go out of business. Has YC provided > 20% success rate - I don't know, I'm
asking? How does YC even define success?

Sequoia and YC do not have a monopoly on technology success, far from it.
There are many thousands of excellent, proven technology investors around the
world available to work with. Pretending your idea is better than all but the
"top 10" is laughable really.

PS: Mentioning YC in the same sentence as Sequoia isn't really fair to Sequoia
given their success.

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trapper
By the way, just checked out your profile and saw virtualmin - I wasn't
bagging it, I was meaning "an idea" in an abstract sense.

~~~
SwellJoe
And I was being concrete, but generic...I don't think one should take money
from someone you can't trust to share your vision for your company. In our
case, we're being extremely particular about what investors we talk to, and
who we'd take money from (and, so far, we've opted not to accept any
additional funding--we don't need it urgently, and we'd rather it be a perfect
fit than a desperate cash-for-suffering deal). Of course, perhaps I shouldn't
use the phrase "top ten"...there are certainly great VCs we haven't heard of
yet. Sequoia wasn't always top dog (KP held that title for many years in the
past, if I recall correctly), or even on the radar for most investors. I'm
just saying it's really important to be careful who you allow onto your board.

~~~
trapper
I would never suggest taking money from someone who doesn't share your vision,
I just know that Sequoia and YC don't have a monopoly on technology success. I
especially find advice from serial entrepreneurs in tangible technology space
useful - while they don't have the big exits that the early/lucky digital
technology entrepreneurs have, they know "real" business better in my
experience, and always have something useful to say.

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walesmd
Depends on the company - some of the others out there offer very comparitive,
if not better, benefits than YC.

In terms of money: a YC dollar is worth no more than a dollar found on the
street.

I guess my answer is yes.

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gscott
The primary purpose is to lend credibility. As long as the others doing
similiar things have credibility to lend, they seem acceptable.

Once you have your product and their credibility then you need to wield it
carefully to get to your destination.

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SwellJoe
Yes, it lends credibility, but it's not necessarily the primary purpose...at
least not of YC. There are a lot of good benefits to YC...it's an educational
experience, a community-building experience, and more. Of course, it doesn't
hurt that dropping the YC bomb in a discussion with an investor is an
automatic upgrade to "vetted" in the investors mind (works with valley press,
as well, apparently).

~~~
gscott
I was thinking more along the lines can these people starting a "YC Clone"
bring real investors who might invest on "demo day". I should have said that,
but it all comes down to credibility (on many different levels, the process,
the people running the process, the founders, etc).

It seems to me, and I may be wrong, that the YC system has an extra bit of
credibility that can be spent even if a person isn't successful with what they
built in YC they can build something new and still have a better then average
chance.

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wayne
As a Silicon Valley person, moving to Colorado, Philly, or DC for even a few
months doesn't seem very logical.

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vaksel
if no other choice sure why not? Not everyone gets into MIT, so it doesn't
hurt to diversify your applications. And in the end run its better to have
even a crappy state school over not going to college at all

