Inside Y Combinator's growth spurt: 51 startup founders divulge the biggest changes

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Y Combinator is no longer the elite startup club it once was. 51 YC alumni tell us what's better, what's worse, and why they still think it's worth it.

Meru was one of 346 companies accepted for winter 2021, which ended in March — Y Combinator's largest batch ever. Over half were based outside the US. With the coronavirus pandemic raging, the founders attended theirThe online curriculum involves all the same lessons and advice on startup essentials like building a pitch deck and fundraising a seed round.

The smaller checks have freed up money to invest in as many as 3,000 more companies, according to YC. That combined with the all-virtual format means YC is opening the doors to a broader, more diverse group of entrepreneurs than in the past and improving its odds of finding the next Airbnb.

It was a formative and career-defining experience for many of the first enrollees, including Alexis Ohanian and Steve Huffman, the founders of Reddit. They would go on to sell the company for millions of dollars about a year later, marking the first exit for YC's experimental investment model.Paul Graham/Y CombinatorShow less

For Jason Tan, a cofounder of Sift, the interactions with partners were invaluable. Shortly after starting the program, Tan looked at other startups in his cohort, including the lyric-annotation website Genius and the food-delivery app Caviar, and decided his anti-fraud startup was too boring. Tan and his cofounder wanted to pivot to something sexier, like a consumer app. They got into a heated debate with Altman, who was convinced that anti-fraud software was a better business.

Graham"wasn't always right, but he was usually right," said George Deglin, who went through the program with OneSignal in summer 2011."And I think everyone appreciated him for being really direct." Nearly all the startups Insider spoke with said they found their YC experience valuable. But a recurring criticism was that not all startups were treated equally. Each crop quickly divides into two unspoken camps: those that are deemed to be on a surefire path of success, and those that aren't.

The perception of favorites underscores the challenges ahead for Ralston, the third president in YC's history. There are some encouraging signs. As of July, the top companies in the summer 2020 batch had an average return on capital of 1.65x, and the top companies in the winter 2021 batch had an average return on capital of 1.5x, according to a summary sent to investors in the Pioneer Fund, a syndicate of mostly YC alumni that invests in a selection of the top companies of YC batches. This means that after Pioneer invested, those young companies became an average of 1.5 times as valuable.

 

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