How Y Comibnator Changed the Business of Starting a Business

Do you know what is the common thing between the Weebly platform for an easy website development, the futuristic food substance Soylent, the Quora site for answering various questions, and the Twitch video game streaming platform? Although they are positioned in very different market segments and have a different structure and market capitalisation, they all actually have something in common - their founders have literally created them together. This is because these companies were started in the shared office space of the start-up accelerometer Y Comibnator.

Even if you hear this name for the first time, you have surely heard of many of the companies that made their first steps there. Today, it is undoubtedly the most influential accelerator for startups in the world of venture investments that has “given life” to dozens of the most promising technological startups.

What Are Startup Accelerators 

The model of this type of organisations is simple and effective. Once or twice a year, they collect applications from start-up entrepreneurs who need support to develop their projects. Approved candidates are included in the Acceleration Programme, which includes several months of project development in a shared workspace, an intensive mentoring by successful entrepreneurs and investors, accounting, legal and marketing assistance, and, often, financial investment in projects. Most accelerator programmes end with the so-called “pitch” - presenting their companies to an audience of investors and other entrepreneurs.

In recent years, thousands of such accelerators have emerged worldwide, most of them still in the US, but their numbers in regions like Asia and Europe are rapidly rising. They have a very positive impact on the entire startup ecosystem, since they support startups at a very early stage, at which it is still difficult to attract venture capital investments. Today, for startups at an early stage of development, it is still very difficult to raise funding for the development of their ideas, compared to, for example, companies at a later stage, which need money to grow. Or, in other words, it is often more difficult to find investments amounting to several tens of thousands, than, for example, several million. This is the niche that startup accelerators fill successfully.

And the company that most influenced the development of accelerators over the years is Y Comibnator. It started its activity in 2005 - a time when the internet segment looked completely different, Facebook was barely making its first steps, and Steve Jobs had not yet introduced Apple's first iPhone model that would change the smart phone industry. Founders of the first modern startup accelerator are Paul Graham, Jessica Livingston, Trevor Blackwell, and Robert Tappan Morris, and the first two “cohorts” of startup projects had gone through the programme by 2008 in the American cities of Cambridge and Mountain View. Graham himself managed the company until 2014, when he relinquished the presidential position to the entrepreneur and blogger Sam Altman. Pointed out as

One of the Most Influential Figures

in the startup industry and a winner of a number of awards, he has made important changes in Y Combinator, introducing the practice of investing USD 120,000 in startups against 7% of their shares. Over the years, Altman has made a number of other important changes, redefining the look of the modern accelerator.

Today, 13 years after its creation, Y Combinator has already supported over 1,900 startup projects with more than 4,000 founders, and the overall market assessment of all companies that have gone through the acceleration programme amounts to the impressive USD 100 billion. Among them are the names of the Airbnb real estate rental platform (with a market capitalisation of over USD 38 billion), Stripe for processing online payments (USD 20 billion), the Dropbox cloud storage platform (USD 10 billion), the Twitch electronic sports streaming platform, which about four years ago was acquired by Amazon for nearly USD 1 billion, the Machine Zone game publisher (with capitalisation of approximately USD 5 billion), the CoinBase cryptocurrencies platform, and the Instacart food delivery site.

What’s interesting is that the accelerator also supports startups, which have almost no chances of getting any other investment, because the activity they are developing is too futuristic or, according to many, even impossible. These include, for example, the Nectome company, whose founders intend to create technology for the transfer of human consciousness into a machine, but are still far from any real results in this direction. Another project for which it is quite early to predict its development is Soylent, which develops the nutritional substance of the future of the same name, which, at least according to its creators, aims to solve the problems of hunger. Although the futuristic food is still not emraced by the general public, Sam Altman and his team are not afraid to invest in it and support its development, demonstrating their philosophy that venture investors must invest resources and efforts in innovations, for which it is not clear whether they will ever become profitable endeavours.

Several months ago, the accelerator published a list of nine types of startups, which, according to its management, the world will need more and more in the years to come. From technologies for removing carbon dioxide from the atmosphere, through ones in the field of agriculture or creative industries, to projects for increasing longevity and improving memory - Y Combinator once again sets the standards in the industry of venture investments, showing that it is time for organisations in the sector to stop looking only at information technologies and look at new segments of key importance for the future of humanity.