Companies from Y Combinator’s Summer 2017 Demo Day (Day 2)(techcrunch.com) |
Companies from Y Combinator’s Summer 2017 Demo Day (Day 2)(techcrunch.com) |
Just wow. Now there is a concept that sells itself. It's easy to see the Total Addressable Market potential. Savings institutions such as Vanguard and BlackRock are completely embedded in our lives. Every high school student who graduating this summer was probably given the same advice to start saving early and I'm guessing for those who did, many selected a Vanguard fund. At least those not speculating in BTC and ETH.
For Asia's emerging middle class, solving the problem of where to safely invest for generational periods of time looks daunting but enormously rewarding. Am interested in hearing about all aspects of the issues and Piggy's solution. What are the cultural roadblocks to getting young Indian professionals who just want to spend on travel, living material goods, etc. to think about investing long term? What comprises the funds holdings? How do you solve the issue of liquidity? Are you considering developing your own products such as market ETFs for direct investment?
I think the addressable market is huge, partly because the major things allowed in the tax saving section 80 (C) are life insurance premium, a government backed retirement fund (PPF), and long term mutual funds. The last one is the easiest to invest into. That means it's relatively easy to onboard working professionals if they are want to save tax in that section.
One issue is that the public isn't knowledgable enough about merits of equity markets. For some, it's a gamble and would rather go with fixed-rate funds.
If I compare with the companies in the batch 5-6 years ago, the difference seems conspicuous. Where are the companies like Segment, AnyPerk that were struggling to find a product-market fit and presumably, were working on bad ideas? The companies who wouldn't have a good answer to what they're solving and why? There are bets, like Greo, Goosbump, which would find it hard to attain a sustainable revenue, but I think the numbers are still low.
Paul Graham used to insist that their first priority is the team, but I think they have inadvertently raised the bar. Or, it could mean that startup wisdom of building MVP, talking to users, has become mainstream to warrant the decline in the bad ideas.
YC has global reach and is now very well known. That increases the applicant pool and that in turn means there are more quality applications as well. Having a larger pool of quality applications means that it becomes easier to select companies before a batch is considered 'full', lower quality applications will therefore have a much smaller chance of getting selected in a given batch.
So even if YC's first priority hasn't changed at all there is still a very plausible explanation for the effect you are seeing.
You are not wrong.
The batches are of noticeably lower quality. I wont name names out of respect for the founders obviously, but you certainly have to wonder if some have been chosen solely based on their touting the latest cool tech buzzword in their application. My opinion also is that YC has moved from its earlier mandate of discovering talent to funding companies that the partners consider 'promising', where 'promising' == 'safe bet'. A lot of talented founders do not have the resources to build a company that has gained traction by the time they apply; heck a lot of talented founders not even have a viable company/idea at the time of first contact.
YC now funds companies that in another era would be considered stable, non risky investments. Could AirBnB, Reddit, Segment and DropBox (companies founded by wild youngsters with only an idea,in the case of Segment and Reddit founders a bad initial idea, and no market presence) be funded by YC today ? I'd bet not. Why? Because YC now places safe bets. You know which other institution plays it safe when giving out money ? Banks. The partners were on to something when they announced YC fellowship in 2015, it would have been a way to return to their roots and explore anew the lost idea of seeking out and funding talent, but sadly they shut it down. YC has grown big and successful and perhaps is itself ripe for disruption.
It looks like it's a review generation / marketing automation / CRM solution for small businesses.
Just off the top of my mind, i can think of the following venture backed companies that do the same (at least on the reviews / marketing for SMB front):
- BirdEye
- Podium.com
- DemandForce
- Signpost
- Yodle
- Womply
- Broadly.com
- Yext
What am I missing?
Companies will pay tens of thousands of dollars/month to hire good support staff. If Loop can automate easy tickets away with a knowledge base (with NLP/ML + humans), the unit economics of their pricing seems really good. Any company with a large volume of non-technical support tickets could benefit from Loop. Does anyone know how competitive the space is?
Some advice to Loop founders though: please learn how to design a website - looks like a badly clobbered Bootstrap job.
EDIT: They had a show HN post a couple of months ago https://news.ycombinator.com/item?id=14515494
Doesn't exactly give me confidence in their tooling.
Not sure that's a comparison I'd invite in that market.
BTW Does anyone knows how many off the record presentations, the batch official numbers are around (125).
Edit: one company dharma.io
There was also a WSJ article[3] today though I did not read it since it's paywalled. Anyway to read the article?
[1] https://blog.ycombinator.com/get-automated-leads-from-a-data...
[2] http://betakit.com/slik-ais-founder-the-youngest-canadian-en...
[3] https://www.wsj.com/articles/teen-duo-behind-slik-to-present...
Great to see such young entrepreneurs, who is the CEO? even in Delaware I think you must be over 18.
Good: Hardly any entry of "Uber for X". That's a relief considering most "uber for X" are not viable businesses.
Bad: we are going after "billion dollar market". How do you even estimate the market size ?? why dream of revenue in billions why not millions. A small company can be a great company. Bad: 50%-60% companies from day 1 or day 2 do not have mission critical business. Their business is finding a problem for some kind of solution that claim to have.
So, for investing in companies, there is no point funding companies aiming for millions as you can't get a good return because of the failure rates. They're basically taking up one of the slots of a potential billion $$$ company.
The point is for every 10 companies funded, have 1 become a billion $$$ company, while most of the rest will fail.
Say YC has a 6% stake, which gets diluted down to 1%(? I don't really understand this side of it) and then the company sells for $10 mill. Great for the founders, but YC only make $100,000. That doesn't cover the other 9 companies that failed (10 * $16,000 = $160,000 = $60,000 loss).
No investor ever invested in a billion dollar start-up to be knowing that start-up was going to be a billion dollar company one day.
So those stats are based on one thing only: survivor bias and each and every investor will have to be satisfied with investing in what they believe to be solid performers with potential upside.
You can buy 20k in MRR with your YC investment, just for a pop at demo day. Keeping up growth is another thing all together.
I was viewing it through the corporate proxy at work. But I don't typically have issues like these.
"YC isn't taking any risk" ... "Nuclear fusion / quantum computing / _insert_moonshot_here_ is dumb and will never work"
Lol
As a company (YC), as you grow and set aside more $ (or have access to deeper pockets thank to your past success rate), you are willing to take more risk than before.
I actually think its a positive thing, especially for those who apply!