Y combinator is an American seed money startup accelerator launched in March 2005. It provides seed funding for startups. Seed funding is the earliest stage of venture funding. It pays your expenses while you’re getting started. It has been used to launch over 2,000 companies; such companies as Stripe, DoorDash, Coinbase, Reddit etc.
The YC Fellowship Program was announced in July 2015, with the goal of funding companies at the idea or prototype stage. The first batch of YC Fellowship included 32 companies that received an equity-free grant instead of an investment.
In January 2016, Y Combinator announced version 2 of the Fellowship program, with participating companies receiving $20k investment for a 1.5% equity stake. The equity stake is structured as a convertible security that only converts into shares if a company has an initial public offering (IPO) or a funding event or acquisition that values the company at $100m or more. The YC Fellowship was short-lived. In September 2016, then CEO Sam Altman announced that the fellowship will be discontinued.
However, it rebounded back In 2017. That year, Y Combinator announced Startup School, an online course that released public videos and also coached individual startups on a larger scale to replace the fellowship. A total of about 1584 startups graduated the program in its first year.
What you should know.
Y Combinator interviews and selects two or more batches of companies per year. The companies receive seed money, advice, and connections in exchange for 7% equity of the company. The program includes “office hours”, where startup founders meet individually and group meetings. Founders also participate in weekly dinners where guests from the Silicon Valley ecosystem (successful entrepreneurs, venture capitalists, etc.) speak to the founders.
What you must know.
Y Combinator’s motto is “Make Something People Want.” The program teaches founders to market their product, team and market, refining their business model, achieving product market and scaling the startup into a high growth business, etc. The program ends with Demo Day, where startups present their business and sometimes technology to potential investors.
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