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My dissertation – Ycombinator & its spawn – How to do it right

I, like many geeks, love the Ycombinator programme. It was really the first of its kind, and was started by Paul Graham and his friends in 2005.

About YCombinator (YC)

What is it? A three-month long programme to help start startups. Founders (you) get ~$15-20k in “seed” cash so they can live without any other commitments for the three months, in return for ~6% equity in the business. (Thus, being accepted immediately values your business at ~$300k, not that this really matters.)

During those three months there are weekly dinners with the ~15-30 other companies accepted into the programme. YC specifically doesn’t offer office space, but these regular dinners and office hours with Paul Graham provide regular contact and guidance from other startups going through the same issues you are. These dinners also feature guests/speakers from across the startup/tech industry.

At the end of the three months is a Demo Day, which is attended by some of the top VC’s and angel investors in the US. (I’ve heard anecdotally that as YC has established its brand, Demo Days have become much better attended.) So in addition to helping get your startup and demo ready, YC puts you in touch with an incredibly ecosystem of VC’s and advisors to take you to the next stage.


My dissertation

Since Ycombinator became successful, there have been efforts around the world to try and copy the “secret sauce” which makes YC a success. These include:

But while each of these other programmes are broadly similar to YC, they’re actually fairly different. What I consider to be broadly similar is:

  • For small teams of startup founders to work on their own ideas
  • Defined term of programme
  • Funding – for living expenses while on programme
  • Education – intense period of product & business advice
  • Contacts – help you make appropriate contacts to help you in the next stage
  • Demo Day – opportunity to pitch to potential funding sources and advisors

My Goal

I am writing my dissertation in order to put a “framework” around the YC “special sauce.” If you’re thinking about setting up something like YC, what do you need to include and what do you need to avoid? How do your goals for the programme help or hurt its eventual chance for success? What will truly help entrepreneurs, and how do you make sure you do that in the programme?


Summary

So this is what I’m going to be spending a lot of time on this summer. I hope to release an early draft or two openly to get comments, and then release my final paper when it’s finished at the end of August. I hope that providing a way to think about YC will help other people as they set up similar programmes, hopefully world-wide!

  • andrewhyde

    Very interesting!

    Let us know if we (at TechStars) can help.

  • Thanks, Andrew! I will certainly be in touch in the next couple of weeks.

  • And I hope that you get to meet Paul Graham! That opportunity alone is enough of an incentive for me to write a 100-page essay about anything.

  • ericbruntmyer

    Jed,

    I'd love to read more about your work.

    Eric

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  • Great idea for a dissertation Jed. I'd love to see an analysis of the success rate of YC and other schemes like it. YC in particular seems to produce some really interesting companies.

    Looking forwards to seeing the draft. Let me know if I can be of help.

  • jemonleon

    It's very interesting.

    Here in Barcelona we started SeedRocket two years ago and we are very interested to learn more about the model.

  • Thanks, Nigel. Most of the programs are so young that there's no chance of any decent success stories. But with four years of history, YC already has had some notable successes. (Reddit, Omnisio, etc.)

    I hope to keep what I create there fairly “live” to keep track of companies over time.

  • Hello! I hadn't heard of SeedRocket before, and unfortunately I can't read Spanish. Do you have any information in English about the program? Would love to include it in my run-down of similar programs.

  • I have a feeling the results might surprise you. I too would love to see such an analysis.

  • jemonleon

    Hi Jed,

    I attached a briefing about SeedRocket.

    I'm going to explain you how it works SeedRocket.:

    SeedRocket is a non profit association, that has 24 mentors associates. The
    mentors are people who has started technological companies and they have
    been success.

    Every six month we organize a SeedRocket Campus. During 8 days, ten startups
    and ten mentors works works together in different areas (strategic,
    business model, …). The last day the mentors select the best 3 startups.

    The mentors invest in that three selected startups, the amount invested per
    startup is 20.000€. So all the mentors has the same shares in every startup.
    The 3 startups selected will work in the SeedRocket offices during 6 months,
    and SeedRocket team and mentors try to accelerate the companies. After 6
    months if the startup has potential we try to raise more money.

    Now SeedRocket portafolio has 12 companies and 5 of them has raised more
    money from other Business Angels o Seed Venture Capital.

    Now we are planning to change the model, because we would like to scale
    SeedRocket.

    Best regards,

  • amirmc

    What a coincidence … I think we should have a chat at some point soon 😉

    When is good for you?

  • amirmc

    Also came across http://www.daretobedigital.com/ Sounds similar but applied specifically to computer games. Would it fit with your dissertation?

  • I'm not sure, but will definitely look into it. Thanks for the heads-up!

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  • jemonleon

    Hi Jed,

    I'm going to give you a detail of the companies that have been supported by
    SeedRocket in Spain:

    Escapada Rural Julio 2008 Find and booking holiday cottages and rural hotels
    and activities
    http://www.escapadarural.com/ Linkua Julio 2008 Marketplace to learn a
    language online
    http://www.linkua.com Wedtool Julio 2008 Online app to manage a wedding
    http://www.wedtool.com/ Masterbranch
    Enero 2009 Open source developers network
    http://www.masterbranch.com/ Habitissimo Enero 2009 Marketplace of local
    builders and tradesman
    http://www.habitissimo.es/ Ongest Enero 2009 Online app to generate and
    charge invoices
    http://www.ongest.com Teambox (Saiku) Mayo 2009 online app to manage
    projects
    http://www.teambox.com Monazen Mayo 2009 Marketplace for health, beauty and
    wellness. Listings of spas, salons, wellness centres, therapists, and
    practitioners,
    http://es.monazen.com Bluewalks Julio 2009 *bluewalks* is a collaborative
    platform to find, create and share walking tours. http://www.bluewalks.com/
    Biowallet Julio 2009 Mobile biometric security solutions
    http://www.biowallet.net/

    We provide offices during 6 months, and the shares that we take is between
    5% and 15%.

  • good luck on your final paper dude… keep up the postings..