Basically, I want to know: What are the chances of a startup's chances of making it big after going through the program?
I realize it's vague but any facts or figures would be very helpful.
Incidentally, I wouldn't want it to be much higher. If it was 100%, it would mean we were picking too conservatively.
(Don't get me wrong, the number of business you get on their feet is one of the things I admire about YC.)
We definitely don't turn down people because their ideas seem over-ambitious. Nor do I think we ever talk people out of them. We like ambitious ideas. At most we get founders to think about what to launch first. But they should keep the big idea in mind-- not just as something to aim at, because investors want to hear about it.
The sort of risk I don't want to stop taking is not a risk on ideas, but on people. E.g. I don't want to stop accepting young founders, who tend to have a sharply bimodal distribution of outcomes.
I think YC has been shifting focus to evaluating teams rather than ideas. If there is a solid team with a wacky idea, they might be accepted based on the strength of the team alone.
Contrast that with other business types included in those SBA figures, like restaurants and liquor stores. Those businesses start out in debt because of leasing costs, equipment purchase, payroll, licensing, insurance, etc. It is also much harder to scale a restaurant than a website or app (because of geography).
Whether that's due to real promise of future profitability, versus a funding bubble, is something to judge in hindsight. ;-)
Is that the official number, and if so does it include everybody who sends an application or just those who gets an interview?
You've mentioned that the classes are getting larger and there are more companies who are applying to YC when they're already profitable. Won't there be a time when this number has to hit 100% because there are more profitable companies coming in than you can accommodate in a class?
A VC may balk because the company can't absorb a million or more in capital, but YC is only invests roughly 20K.
EDIT: To answer my own question, I suppose if there were enough other applicants that were for whatever reason more promising, this could easily happen.
I think there's your answer...there are likely quite a few applicants with profitable companies (ramen or otherwise) but that aren't scalable, likely to attract outside investment, or suitable for acquisition.
The first "class" was 6/2005:
Reddit (made it pretty big)
Infogami (joined reddit, "made it big")
Kiko (sold for ~$250k, started Justin.tv - likely to make it big)
Loopt (well-funded, great traction, seems likely to make it pretty big)
Firecrawl (one founder joined TextPayMe, another YC company that sold to Amazon)
Simmery (one founder joined Reddit and presumably made it sorta big)
--> That's 50-75% seeming to have a pretty good shot at making it somewhat big.
You can head to: http://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l1...
and do your own math, but it's pretty premature for most of the classes.
It's like the first season of American Idol produces the most successful winner...
"Lisa Lambert, Vice President at Intel Capital, said:
It just takes a long time to go from startup idea to a liquidity event. [...] During the boom days, it was like 2.6 years to get liquidity. And today, the latest average from NVCA, the National Venture Capital Association is 8.7 years."
You can read up on them here: http://www.techstars.org/results/
I suspect YCombinator's are similar to those.
Judging by the success we've seen so far, it looks like YC is getting better and better each year. We'll see a few solid exits per class in the years to come, and I'll bet it won't be long before we see a massive acquisition on the scale of YouTube which will really catapult YC into the spotlight (what's 6% of $1.65 billion?)
YC won't get 6% of such a deal. A massive acquisition like that usually happens after a round or two of funding diluting the original ownership interest.
Still it would be a nice return on investment.
It's patently impossible to know this.
Do you really think that out of 25-35 per class we won't see at least 2-3 who successfully exit or become profitable within 5+ years? If the YC team didn't expect as much, they wouldn't doing this anymore.
Here is a spreadsheet someone put together with most (all?) of the incubators and the status of their companies.
edit: someone beat me to it :-(
Dont know about exits though