Y Combinator has created a new model for funding early stage startups.
Twice a year we invest $500,000 per company in a large number of startups.
We work intensively with the companies for three months, to get them into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present their companies to a carefully selected, invite-only audience.
But YC doesn’t end on Demo Day. We and the YC alumni network continue to help founders for the life of their company, and beyond.
Some FAQ’s about the program:
Where does the YC program happen? Do I need to move to Silicon Valley?
The batch kicks off with a 3-day, in-person retreat and ends with an in-person celebration, both in the San Francisco Bay Area. For the weeks in between, you can participate remotely and do not have to be in the Bay Area. There are weekly meetups in San Francisco, and we encourage teams who can move to the Bay Area to do so. Office hours and batch talks will be online.
How do we choose which startups to fund?
We have an admissions process that’s open to any startup, anywhere in the world.
How much do you invest?
We have a standard deal for all our investments. We invest $500,000 in every company on standard terms.
Our $500K investment is made on 2 separate safes:
- We invest $125,000 on a post-money safe in return for 7% of your company (the “$125k safe”)
- We invest $375,000 on an uncapped safe with a Most Favored Nation (“MFN”) provision (the “MFN safe”)
The MFN safe will take on the terms of the lowest cap safe (or other most favorable terms) issued between the start of the batch and the company’s next equity round. Simply put, we’re giving the company money now but at the terms you will negotiate with other investors later.
Both investments happen at the same time; they are not contingent on any milestones.
What can I use the YC investment for?
You can use the YC investment for anything that you believe helps your business. In most cases, the first use of the funding should be for the founders to support themselves so they can work full-time on their company, typically by paying themselves a salary.
If you have student loans, a mortgage, etc. you can use what you pay yourself from the YC investment to cover those.
What is the time commitment of Y Combinator?
It is less than most founders expect; a few hours per week if you participate in all the recommended activities. All parts of the YC program are optional; as a founder we expect you to choose how to spend your time to maximize the odds of your company succeeding.
Some founders worry that Y Combinator will be a distraction from working on their startup. But actually it’s the opposite; we created Y Combinator to make it possible for founders to spend several months completely focused on their startup with no distractions. Many founders tell us that their three months in Y Combinator was the most productive time of their lives.