- Tech & Gadgets
- BRW. lounge
Published 18 September 2012 05:24, Updated 19 September 2012 07:17
Demanding ... Y Combinator gets about 2000 applications to join its program every year and accepts only a handful. Source: GIGAom
For start-ups and entrepreneurs, there are few tickets more sought after than an entry to Y Combinator, the exclusive California start-up school and venture funding group that helped get the likes of Dropbox off the ground.
Last week Y Combinator opened up applications for its [northern] winter session, which runs from January to March.
Y Combinator gets about 2000 applications to join its program every year, and accepts only a handful, usually fewer than 10 per cent. Of those selected, perhaps 20 will make it through to the final round of the program, with maybe eight of those getting an offer of funding.
They’re queuing up to get in because Y Combinator has runs on the board. In April Forbes ranked Y Combinator as the US’ top incubator, saying the 172 companies that had been through it had been acquired, shut down or raised funding were now valued to the tune of $US7.78 billion. At the time Y Combinator claimed its top 21 companies were worth a combined $US4.7 billion. All this since 2005.
But not everyone’s convinced. Venture capital legend Vinod Khosla told the Tech Crunch Disrupt event last week that incubators like Y Combinator often risked producing start-up that were long on slick pitch skills but underdone on mentoring and guidance.
Khosla told the event that too much hype too early in the life of a start-up could be harmful, as it could overinflate market values and make them a less lucrative investment.
Sydney entrepreneur Nikki Durkin also found the Silicon Valley start-up scene wasn’t for her, despite a stint at Y Combinator, returning to Australia in August after a six-month stint in to take advantage of what she says were lower operating costs in her home country.
This month the US’ Vanity Fair takes a fly-on-the-wall look at what happens at Y Combinator, with an extract from Randall Stross’s forthcoming book, The Launch Pad: Inside Silicon Valley’s Most Exclusive School for Start-Ups, due out later this year through Penguin.
In Vanity Fair Stross follows a group of young start-up founders first known as The Kalvins, which later morphs into transport pooling site Ridejoy, as they seek advice, get grilled by the Y Combinator partners, flap around trying to decide what they should actually make or do and finally make a confident, cartwheels-across-the-stage pitch to a room packed with private money and celebrity glamour.
Following the Kalvins’, Stross unearths valuable chunks of advice for would-be start-up founders. For example Y Combinator founding partner Paul Graham advises that the groups that generally do well in his program are the ones that can put aside all distractions, like the 2007 group that stocked up on Lean Cuisine and went hell for leather coding, with only the occasional breakout for a quick games of tennis.
It’s also Graham that advises the Kalvins to avoid massive numbers in their pitch, because while a market worth trillions might seem impressive, such huge numbers tend to put people more in mind of government rather than business.
Yet while Y Combinator provides mentoring, its partners don’t hover over start-up founders and guide their every move, “You’ve been sort of trained by circumstances, by school and work, that there is going to be someone who will nag you if you do badly,” he says.
“If you’re not delivering, your boss will say, ‘Hey, you’re not delivering,’ and eventually he’ll fire you if you’re not delivering. Here, we don’t fire you. The market fires you. If you’re sucking, I’m not going to run along behind you, saying, ‘You’re sucking, you’re sucking, come on, stop sucking.’ ”
MORE TIPS FOR ENTREPRENEURS: