Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends.
It’s YC week, and while I love to question how the accelerator’s impact is evolving in today’s climate, there’s always a lot to learn about hundreds of founders coming together and debuting their businesses to the world. I, alongside some of my favorites on the TechCrunch and TechCrunch+ team, covered Y Combinator Winter 2022 Demo Day with a series of posts:
Now that we’re done, though, I want to leave you with a few takeaways I had after listening to hundreds of pitches. Here’s what 411 Demo Day pitches will teach you about startups:
India is all about fintech: India was the most represented country, other than the United States in the Winter 2022 batch. For what it’s worth, more than 191 companies in India have been funded through the Y Combinator accelerator, with nearly half — half! — of those companies accepted in the last 12 months.
- Demo Day isn’t for funding, anymore: During Equity this week, we chatted about how demo days have evolved in utility, and if the performance in and of itself is outdated. I won’t ruin our eventual conclusion, but I will mention some illustrious YC data. This year, YC said that it backs startups at any stage for its accelerator, and that more than half of the companies raised money prior to acceptance. To me that means that the accelerator isn’t really for the pre-seed company seeking its first check, but for any company that wants access to the YC network.
- Competition is inevitable: We noticed that a number of startups basically directly compete with each other in this season’s batch, which isn’t a new trend but perhaps a more noteworthy one as the accelerator scales. Most early-stage investors I speak to try to avoid any semblance of conflict of interest, so YC backing companies in the same geography, with identical business models and founding years is contrarian in a way. It seems like the accelerator has avoided any public tensions so far by separating similar startups from each other — but with around a 2% acceptance rate, one has to wonder how similar bets are determined.
I did an earlier version of this column in September, titled “What 377 Y Combinator pitches will teach you about startups.” Months later, the accelerator has grown its expanse, with nearly half of its companies based outside the United States and new representation from New Zealand, Sudan, Uganda and Costa Rica.
I’ll remind you all, as I always do, that YC — similar to any singular institution — isn’t entirely illustrative of the next wave of decision-makers and leaders within startups. Its growing check size, for example, knocked out a whole slew of funders who once poached deal flow from demo day. And when it comes to diversity, the accelerator dipped in support for some underrepresented groups.
In the rest of this newsletter, we’ll look at an edtech round in India, getting rid of pro rata and Cross River Bank’s atypical raise. As always, you can support me by forwarding this newsletter to a friend, following me on Twitter or subscribing to my personal blog.
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