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Looking back – 1.5 years since “Copying Y Combinator”

It’s been nearly one and a half years since I originally wrote my paper on seed accelerators: “Copying Y Combinator: Why and How”, which focused on how other people or organizations could create their own programmes.  I wanted to reflect on what has changed, and what hasn’t changed since, and what that means for the future.

To be clear, my viewpoint is looking at what it takes to make a seed accelerator successful.  Think of the VC business model: not every VC fund is successful.  (In fact, the median net return to VC fund investors has not been positive since 1998.)  To be a continued successful seed accelerator program, you need to have a financial model that works, provide value to the companies that you invest in, and invest in the best possible companies.  That means the best possible companies need to prefer your program to any other.  There are tiers involved, and I’m interested in what makes top-tier results possible.

What has changed:

Y Combinator provides the most money to their funded companies

The deal with The Start Fund was huge news.  There is now an investor that is willing to put $150k into every Y Combinator startup, sight un-seen.  Many commenters have suggested that this will open up YC to older applicants, who will have enough income security to risk quitting a more senior job to do the program.  Though most YC, TechStars and Seedcamp companies raise external funding anyway, having this publicly committed before you even start makes it a nice security blanket.

Perhaps more importantly on a tactical level is that it gives YC startups more breathing room in the fundraising race.  Tommy at CarWoo wrote a great post about this.  As he wrote:

[Fundraising] was a huge issue on the minds of all the YC companies and I know for a fact that it was a distraction. I know it was for us.

Finally, this is a deal for Y Combinator startups alone, and puts them at a significant advantage compared to other seed accelerators in attracting the best companies to the program.  (The highest-ranked factor startups think about when it comes to seed accelerators, per my original post.)  The existance of The Start Fund signals that YC acceptance is a high bar, and it’s worth having an option on every company that comes out of it.

Y Combinator has the largest alumni network

According to my spreadsheet tracker, Y Combinator has funded just about 250 startups.  Combined with an ethos of helping each other out, this is a huge advantage to potential applicants.  I’ve spoken to a number of YC startups, and all of them mention this as a significant benefit.  (This is the second-highest-ranked factor startups think about.)

The secondary effect of all this is that Y Combinator has seen 4x-20x the number of startups that other accelerators have seen.  That means 4x-20x the applications, 4x-20x the founder problems, 4x-20x the customer acquisition problems, etc.  They have more experience with pretty much everything.  That extra experience is valuable for entrepreneurs.

TechStars has developed into a world-wide network

TechStars has recently announced a world-wide network of 17 seed accelerators, the TechStars Network.  What’s interesting with this is that it spreads the business model of seed accelerators more widely, and starts to standardize on best practices.  When I spoke with David Cohen nearly two years ago, helping other entrepreneurs and accelerators get started was clearly something he felt strongly about.  (Which is different to the go-it-alone approach of YC.)  While I believe my original thesis is correct, making each and every one of the accelerators that are popping up better is a great thing for entrepreneurs and startups.

What hasn’t changed:

Y Combinator is still the only seed accelerator in the Silicon Valley area.

There are new seed accelerators opening in what feels like every city, state, and university campus… except Silicon Valley.  (More about this below.)  I find this really strange, to be honest.  The Bay Area is pretty much the richest source of technology startup resources, and most of the programs dedicated to the most fledgling companies don’t exist here?  I can think of two reasons for it.

One, the people interested in starting seed accelerators want to do them in their own hometowns, no matter how suitable those cities are for these programs.  This would explain why so many are started in other cities, but wouldn’t necessarily explain why no additional accelerators have been founded in Silicon Valley.

Two, Y Combinator is seen as an 800-pound gorilla in the seed accelerator world, and no one wants to get in a pissing match with them.  This seems plausible, but I think there are so many resources in SV that any new program wouldn’t intersect with YC.  Perhaps this is more reflective of an ego issue; that no one wants to start a separate program and then be compared to YC?

Y Combinator, particularly through Hacker News, is more directly engaged with startup culture

I’ve grown to think that Hacker News is a key differentiator between the different accelerators.  It provides a strong conduit between the YC partners, the YC alumni, YC applicants, and general entrepreneurial people.  These communities always have existed before (ie, Slashdot), but Hacker News has centralized the audience around internet startups, and more importantly around the Y Combinator experience, philosophy, and brand.

Hacker News helps feed the virtuous circle that makes Y Combinator a top-tier seed accelerator.

Most seed accelerators are just local copies of Y Combinator

I’m disappointed when I see a program that’s simply a clone of Y Combinator in a different city.  Differentiate yourself! Though there are some notable exceptions:

TechStars has definitely taken a different tack with their program, developing into a network of international programs.  Their core programs in Boulder, Boston and Seattle together have a higher level of experience and engagement, with more startups funded and close coordination between the different locations.  TechStars has a mentorship process where each of their startups is matched with 1-2 mentors, and the mentors don’t work with any other TechStars company in that batch.  (They also provide centralized office space for the startups.)  All in all, it’s one of the most developed programs outside YC.

Fundamentally, results are what matter.  TechStars actually publishes their results online, and they’re solid.

Seedcamp has a radically different approach, but probably befitting their non-US location.  (Which means they can easily attract non-US startups that wouldn’t easily be able to live/work in the US.)  They host numerous mini-Seedcamp events across Europe, and then cap it off with their final decision around the handful of startups they put more resources into.  So while they’ve seen a lot of European startups, they’ve only invested in a fairly limited number, about 40.

The Brandery looked very interested when it got started.  They’re located in Cincinnati, Ohio, which seems like it’s off the beaten track for startups… until you remember that it’s the world headquarters for Proctor & Gamble, a company that is incredibly focused on consumer brands.  There’s a huge resource of talent for companies that need strong consumer brands.

I was hoping that this would open The Brandery up to startups that weren’t just consumer internet startups, but it looks like the list of their 2010 companies were just that.  I’ve now become more dubious; at the early stage of these startups they need a product more than they need a brand, so the accelerator won’t be able to offer as much value.  Perhaps there’s a place for a slightly later-stage startup: one that has a solid product but needs a brand finishing school to take them to the next level?


Andrew Parker (formerly of Union Square Ventures, now at Spark Capital) made an interesting comment on my original post:

If you’re going to copy YCombinator, then you should really give credit where credit is due: thank YCombinator. I went to the demo days for LaunchBox, TechStars, SeedCamp, fbFund REV and YCombinator in the past year. The only YC clone that even acknowledged that they were a YC clone and, furthermore, thanked YCombinator for their pioneering efforts was Dave McClure at fbFund REV. All the other programs never even mentioned YCombinator at the demo day.

Now I’m not convinced that every other accelerator should genuflect upon Y Combinator at each of their Demo Days, but what Andrew pointed out was interesting.

Y Combinator appears to be the least structured of all accelerators

TechStars was the second major seed accelerator out of the gate after Y Combinator, and they’ve started the trend of what appears to be much more structure in the TechStars program, and the programs TechStars has influenced.  In addition to periodic meetings for everyone, they have all the startups work in the same physical office, and have a structured mentorship system.  (As I understand it, each startup in a batch is matched with a small number of mentors, and those mentors work only with that specific startup.)  This is quite a bit different from the YC model, where the major structure is a weekly dinner and then open office hours with the YC staff which you can take or leave.

What this means for seed accelerators:

You need to be unique, where unique is not just a seed accelerator in a different city

I am still absolutely convinced that if you’re a Y Combinator clone, just located in a different city, you will never be a top-tier program.  Why?  Because if you’re just doing exactly what YC does, but you provide less money and less expertise, you’ll never have the top startups wanting to work with you.

What I’m waiting to see is a program that does something else entirely.  For example, what about an accelerator that works with companies building actual, physical products?  Companies like Wakemate (from YC) have struggled as they work out production issues, find and develop relationships with factories, etc.  If there was an accelerator that had a group of mentors that could help guide startups through this journey, with contacts a low- and higher-rate production facilities, and in a financial structure that made sense, I think it could be tremendously successful.  (Again, defining success as being the top-choice of any startup working in that field.)

This is simply one example; you could do a dramatically different approach any number of ways.  (After reading Roger Ehrenberg’s blog, couldn’t NYC start one around a theme of big data, data visualization and finance?)  But so far, everyone just wants to have an accelerator for internet software startups, generally consumer focused, with the same model as YC.  There’s more potential out there, people!

There’s room for another seed accelerator in Silicon Valley

Who’s going to start it?

(Dave McClure seems to have made a stab at this with the 500 Startups Accelerator; the main difference from others being that there’s no open application, startups have to be referred in.)

You need to be a program that everyone you’re focused on badly wants to attend

As one famous Google executive says, “Repetition doesn’t spoil the prayer,” and thus I want to keep repeating myself here.  To be a truly successful seed accelerator, you need to be highly desired by the best companies you want to help.  There needs to be a strong match between what you offer, and what the startup wants and needs to be successful.  There will always be companies looking for investors, and if your pool isn’t that big some of them will certainly look good, if only by comparison.  But your accelerator needs to be the preferred program for the best startups.  Those best startups have the best chance of being successful and generating the results and returns that enable the program to continue sustainably.


I still feel like we’re in the very early days of seeing the successes and failures of seed accelerators.  The startup world, and specifically the funding world, appears to have a number of discontinuities.  (Particularly once you start getting away from consumer internet startups.)  Seed accelerators have a great opportunity to start filling in the existing gaps, and helping companies go from idea to polished execution much more cleanly.

Going back to a link I shared near the top, Bryce Roberts has some great comments about VC funds that I believe also apply to seed accelerators:

a handful of them have been delivering outsized returns for decades now. They don’t call Sequoia, Accel, Benchmark, KP, Matrix, Greylock “top tier” for nothing. They’ve figured out a few things related to building enduring companies and consistently delivering returns for their investors.

If you’re going to start a new fund, be different. Proprietary dealflow, investment stage, operating experience or deep network of industry contacts are meaningless buzzwords that aren’t going to set you apart from the pack. As SuperLP says “to do something outstanding takes audacity.  And indeed, private equity should be all about audacity”. Being the 10th seed fund, or 5th “opportunity” fund isn’t going to set you apart from the pack. Be different.

To create a top-tier seed accelerator, you need to be a top-tier choice for startups the world over in your niche.  Just like a VC firm, seed accelerators need to have the best possible startups (deal flow), in order to fund the best teams and ideas.  If your seed accelerator can achieve this, you will have a sustainable program.

Appendix – Data

If you haven’t seen it already, I’ve maintained a list of companies that have been funded through these seed accelerators.  Click here for the Google Docs link, or check out the embedded doc below:

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What I struggle with every day…

Seth Godin truly nailed it on the head today with a short blog post titled “In and out“.

That’s one of the most important decisions you’ll make today.

How much time and effort should be spent on intake, on inbound messages, on absorbing data…

and how much time and effort should be invested in output, in creating something new.

There used to be a significant limit on available intake. Once you read all the books in the college library on your topic, it was time to start writing.

Now that the availability of opinions, expertise and email is infinite, I think the last part of that sentence is the most important:

Time to start writing.

Or whatever it is you’re not doing, merely planning on doing.

I grew up loving reading, loving learning and this has transformed me into someone that constantly juggles half a dozen books, a couple magazines, a never-ending Twitter feed and a truly never-ending Google Reader.  But as much as I enjoy it, when I step back I realize that I really love doing something about what I’ve learned.

The problem is saying “enough is enough”, stepping back, and taking action.

It feels like I’ll never get the balance right, but I try to get better every day.

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Meet the rockets that will be bigger than Apollo (SpaceX)

I’ve been a big fan of SpaceX for a long, long time. SpaceX has cracked the nut of becoming a viable, commercial heavy-lift aerospace company. They’ve redrawn the economics of the industry, and have a very bright future ahead of them. The last two recent successful launches of their Falcon 9 rocket have been spectacular!

Aside: I got my degree in aerospace engineering because I love the technology and the aspiration; I avoided working in the field because it’s too cyclical, corporate and dependent on government help.

But onwards and upwards…

Earlier this summer SpaceX made a few presentations outlining some of their future plans. And those plans are AWESOME. Here’s what they’ll be up to in the near term as they develop the Falcon X line of rockets:


The current Falcon 9 rocket can get 10.5k kg into Low Earth Orbit. More tangibly, the Falcon 9 puts the equivalent to three and a half Hummer H2’s into orbit. Doing this requires nine first-stage engines and one second-stage engine.

SpaceX currently has the Falcon 9 Heavy rocket in development. This essentially straps on two additional first-stage sections for a total of 27 first-stage rocket engines! This is a healthy additional boost, and gets 32k kg into orbit. So if you ever wanted to compact eleven Hummer H2s and send them into orbit, this rocket can do it for you.

The Falcon 9 Heavy will also be able to lift more into orbit than Atlas V, Delta IV, or Ariane 5. There are only two systems on the drawing board that are potentially larger than this rocket, and they’re both Russian vehicles that don’t look likely to actually be built. (Of course it will cost you; $56million for a Falcon 9 and $95million for the Falcon 9 Heavy.)

But Space X is looking at developing a large new version of it’s first stage engine, Merlin. (These are speculative right now because it would take $1billion to develop the engine, but clearly thought out.) Powered by this engine, the rocket could put 38k kg into orbit.

Suddenly, this image gets very interesting:


This outlines how SpaceX could operate a Super-Heavy-Lift Launch System. The Falcon X Heavy could lift 125k kg into orbit, and the Falcon XX could lift 140k kg into orbit.

Within six months as the Space Shuttle program shuts down, there will be NO operational Super-Heavy-Lift system operational. And the largest consistently successful Super-Heavy-Lift system was the Saturn V rocket that sent the Apollo missions to the moon.

Where the Saturn V could lift 119k kg to orbit, the Falcon XX could potentially lift 140k kg to orbit. If successful, this would be the heaviest payload sent by man into space. (To complete the metaphor, it’s the same as lifting forty-seven Hummer H2s into orbit.)


I love the ambition of SpaceX, and that they’ve gone from nothing to multiple successful launches in less than a decade without any public funding. (Though they have had key public contracts to resupply the Space Station.) That they’ve designed it from a blank sheet, not being required to refit existing infrastructure or deal with an existing bloated bureaucracy is brilliant, and probably part of the reason they’ve been successful. Lean and mean…

Hopefully this gives you a sense of the future of the space part of the aerospace industry in the USA.

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Visiting White Bear Yard in London; Timetric and Smarkets

White Bear Yard, Clerkewell, London

White Bear Yard is a great little entrepreneurial home in North London, just off Clerkenwell Road in Camden. (It’s close to Farringdon and Chancery Lane Tube stations.) There are about 10 startups who have a home there, and they even have a Twitter account: @whitebearyard.

I’m lucky enough to have friends in two of those startups: Timetric and Smarkets. I got to know the Timetric guys back in early 2009 when Andrew, Dan and Toby had just started getting some really great press about their company. The three founders are all PhD’s, so not only are they wicked smart but they’re also really great people. I got to know Jason Trost of Smarkets back when he and his friend Hunter were just setting up the company and getting their gaming license approved. Again, another great guy (and great company.)

Timetric is a data treasure trove and analysis platform. They have over 1 million data series; everything from consumer price indices to FX rates to sports records that you can combine with your own data to mix and mash up.

Smarkets is an online betting platform, going up against Betfair. While they’re not as big as Betfair, they’re much more social. You can communicate directly with other people on the site, and you won’t get overrun with the other games Betfair tries to push on you (poker, etc.) Smarkets is WAY better than going to a bookie, because you’ll nearly always get better odds.

It was invigorating for me to hang out with them at the end of a long week. Both Timetric and Smarkets are at that really interesting stage of a company where they’ve clearly built a great product, they’ve gotten some good early traction, and they’re working hard on ramping up. Timetric is more of a B2B company, so is really matching their product to the needs of their existing/potential customers. Smarkets is a B2C company, so is very hard at work at customer acquisition. Speaking of which…

Give Smarkets a try!

If you click here and make your first deposit you’ll get a £5 bonus! (I get a £5 bonus, too, which is nice.)

It’s great to see a real ecosystem developing there, and it’s a fantastic space with a ton of smart people all on just a couple of floors. Where I failed is not visiting earlier; the building has a fantastic roof garden that you can see in this article. I think there’s some great success yet to come from these guys.