YCombinator: Growing Startups

By Phin Upham

YCombinator is a well-known name in the Silicon Valley. The company, started in 2005, is a seed accelerator that helps startups launch their products and get out into the marketplace. Initially this took the form of seed investments, with advice and important networking connections, but they soon developed a three-month program to help prep founders.

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Something of a boot camp, YCombinator challenges its startups to create a product that will grow at a steady pace. Success, by their standards, is measured by growth rate. They expect somewhere between 5-7% growth per week, with fringe cases pushing that average as high as 10%.

YCombinator was started by Paul Graham, a British programmer who got his start working on a software program called “Viaweb.” This application allowed users to build their own eCommerce store, a feature Yahoo! bought into and then spun off as Yahoo! Store. He founded YCombinator after having given a talk at Harvard. There, he discussed “How to Start a Startup.” This talk spurred him onto create a program meant to foster younger talent.

YCombinator is behind many brands you know and most likely use today. Dropbox is one of the popular names. AirBnB, which has caused somewhat of a stir in the hotel and apartment rental market, has also received funding from the startup accelerator. The company also began funding non-profits that it considers ground breaking, a practice formalized in 2013 after it successfully seeded and grew Watsi.

To date, Paul Graham has stated that 37 out of 500 startups funded have a value exceeding the $40 million range.

About the Author: Phin Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media & Technology group. You may contact Phin on his Phin Upham website or LinkedIn page.