Geoff Ralston
Auto Added by WPeMatico
Y Combinator President Geoff Ralston shares actionable advice for startup founders
Running a startup accelerator comes with a number of occupational hazards, but “skepticism is the easiest thing to fall into when you’ve seen too many companies,” said Y Combinator President Geoff Ralston, “and it’s the thing you have to avoid the most.”
Ralston joined me last week for an hour-long Extra Crunch Live interview where we talked about several topics, including how YC has adapted its program during the pandemic, why he has “never stopped coding” and what he sees changing in tech.
“We try to not be too smart, because great founders often see things beyond what you’re seeing,” he said. “If you try to be too smart, you’ll miss the Airbnbs of the world. You’ll say ‘Airbeds in peoples houses? That’s stupid! I’m not going to invest in that,’ and you could’ve bought 10% of Airbnb for like nothing back then… 10% of that company… you can do your own math.”
Extra Crunch Live is our new virtual event series where we sit down with some of the top founders, investors and builders in tech to glean every bit of insight they care to share. We’ve recently been joined by folks like Hunter Walk, Kirsten Green and Mark Cuban.
To watch the entire interview with Geoff Ralston, sign up for ExtraCrunch — but once you’ve got that covered, you can find it (and a bunch of key excerpts from the chat!) below.
Advice for getting into YC
I prefer it when an Extra Crunch Live conversation starts out with actionable advice, so we kicked things off with any suggestions Ralston had for folks looking to apply to YC. And he had plenty! Such as:
- Mind the deadline, but all hope is not lost if you miss it: “If you miss the deadline, it’s not the end of the world,” says Ralston. “Don’t tell anyone on the admissions team that I said this, but it’s a little bit of a soft deadline. We would never turn down the next epic company because you missed the deadline… although your odds go down of getting in if you don’t make it in by [the deadline]. Why shouldn’t your odds be as high as possible?”
- Don’t change things up for YC’s sake: “Do whatever you can do to make your company as successful, as real as possible… but don’t try to like, pretty up your company for YC,” he says. “That’s never smart [to do] for an investor. Don’t make bad short-term decisions because you think there’s a deadline that you should do wrong things for. Instead, build your company for the long term, and do the best you can possibly do to find product market fit, to build the right product, to build the right technology, to build the right software or whatever it is you’re building.”
Later in the video (around the 40:55 mark), a question from the audience leads Ralston back to the topic, and he has a few more pieces of advice:
- Stick to the instructions: “The instructions are fairly clear. It says: do a one-minute video, have all the founders there, and talk to us. That’s a good idea! Don’t give us some marketing video, we’re not interested in that. That’s not how we’re making our decision.”
- Hone your pitch: “Think about expressing yourself concisely, with great clarity. It does not help to write a book in the application. Be kind to us! We’re reading, you know, hundreds of applications. Get your idea across as clearly as you can. That’s actually a really good signal to us, if you can describe what you’re doing with a minimum of words. That helps us a ton.”
- Tell your story: “Do not skimp on talking about yourselves!” Ralston notes. “We are super interested in you, who you are, and why you’re doing what you’re doing.”
Powered by WPeMatico
Extra Crunch Live: Join our Q&A tomorrow at noon PDT with Y Combinator’s Geoff Ralston
From Airbnb to Zapier, and Coinbase to Instacart, many of the tech world’s most valuable companies spent their earliest days in Y Combinator’s accelerator program.
Steering the ship at Y Combinator today is its president, Geoff Ralston . We’re excited to share that Ralston will be joining us on Extra Crunch Live tomorrow at noon pacific.
Extra Crunch Live is our virtual speaker series, with each session packed with insight and guidance from the top investors, leaders and founders. This live Q&A is exclusive to Extra Crunch members, so be sure to sign up for a membership here.
Ralston took on the YC President role a little over a year ago shortly after Sam Altman stepped away to focus on OpenAI.
In the months since, Y Combinator has had to reimagine much about the way it operates; as the pandemic spread around the world, YC (like many organizations) has had to figure out how to work together while far apart. In the earliest weeks of the pandemic, this meant quickly shifting their otherwise in-person demo day online; later, it meant adapting the entire accelerator program to be completely remote.
While still relatively new to the president seat, Ralston is by no means new to YC. He joined the accelerator as a partner in 2012, and his edtech-focused accelerator Imagine K12 was fully merged into YC’s operations in 2016.
Powered by WPeMatico
YC to cut the size of its investment in future YC startups
In a blog post this Friday afternoon, Y Combinator’s president Geoff Ralston said that the accelerator would make two changes to its terms for startups.
The first would see the size of the standard deal for YC startups decline from $150,000 for 7% (roughly a $2.1 million post-money valuation) to $125,000 for the same equity (or roughly a $1.79 million post-money valuation). The deal will continue to be offered using a SAFE, which YC and a group of others pioneered as a simpler investment option compared to convertible notes.
Interestingly, the firm is always writing into its terms that it will only take pro rata up to 4% of a subsequent round’s size, which is obviously smaller than the 7% ownership that the company is buying in its financing. That 4% number is a ceiling — in cases where the accelerator has less ownership than 4%, the smaller percentage applies. Full terms of Y Combinator’s deal are available on its website.
The new deal will apply to startups who join Y Combinator in the Winter 2021 batch, and doesn’t include startups in the current summer batch (who have already presumably been funded)
YC’s deal has varied over the years. When it first launched more than a decade ago, it offered terms of $20,000 for 6%.
A Y Combinator spokeswoman said that the change was in line with the fundraising and budget realties of the accelerator going forward. “The future of the economy is unpredictable, and we feel it is prudent during these times to switch to a leaner model,” she said. “In our case, we want to be set up to fund as many great founders as possible — especially during a time that is creating an unprecedented change to consumer and business behavior; with these changes comes endless opportunities for startups. And with the changes made to our standard deal, we can fund as many as 3000 more companies.”
Outside of budget, at least a couple of factors are potentially at work here. One is the increased use of Work From Anywhere, which presumably can help lower some of the running costs of a startup, particularly in its earliest days (e.g., no need to pay for that WeWork flex desk).
Y Combinator has also invested more of its funds into emerging markets startups, which can have dramatically lower costs of development given prevailing wages for talent in local markets.
Yet, the cutback is also a sign that the flood of capital entering the Valley in recent years has receded — if ever so slightly — in the wake of COVID-19. Valuations are depressing, and while $25,000 is not a massive loss considering the scale of later venture financings, the 16% valuation haircut is in line with other numbers we have seen in the Valley in recent weeks.
Powered by WPeMatico
Professional network for women Elpha raises seed funding
As slow-moving LinkedIn leaves room for startups to flourish, Elpha aims to create a tailored online network for women in tech.
The company is not only a graduate of Y Combinator, but was conceived of behind the scenes of the San Francisco accelerator program. Cadran Cowansage, the co-founder and chief executive officer of the startup, was a software engineer at YC from 2016 to early 2019. It was during that stint that she created Leap, a tool meant to help her and her colleagues communicate. Soon enough, she’d granted the entire YC network of female founders access to the tool. Then earlier this year, she decided to spin the company out of YC entirely, rebrand and relaunch as Elpha.
“There’s a velocity that comes with building a startup and the pressure of funding that keeps you moving very fast,” Cowansage, who counts Kuan Luo as a co-founder, said of her decision to make Elpha an independent business.
“I had the idea for a long time,” she told TechCrunch. “I didn’t feel like I really had a big enough network of women who were at my level or a bit further along than I could go to for advice. Things like how do I get this promotion? Or my male peers, they are being paid more than me, what do I do about that? The conversations that are difficult that you really want a woman’s perspective on.”
A hybrid social and professional network, Elpha is meant to offer women in tech a dedicated space to communicate via public forums and direct messages, foster relationships and build their careers. The company, which completed YC this summer, is today announcing a $1.1 million round with participation from Y Combinator, the accelerator’s co-founder, CEO and president (Jessica Livingston, Michael Siebel and Geoff Ralston, respectively), as well as Maveron, Moxxie Ventures, JaneVC, Friale, Kabam co-founder and visiting YC partner Holly Liu, Block Party founder Tracy Chou and Breaker co-founder Leah Culver.
The “LinkedIn for women” charges $12,000 in annual subscription fees to companies who use Elpha to identity potential hires. Cowansage said the company currently has 20 paying customers, many of which are venture-backed startups like Lambda School and Webflow. The Elpha team plans to use the seed investment to hire, host events and continue the development of new products, including a mobile app expected out next year.
Ultimately, Cowansage hopes Elpha will bring together women in media, science, medicine and more.
“There’s a huge opportunity to bring women together across different industries and also create those sub-communities,” she said. “There’s a ton we can do from here.”
Powered by WPeMatico
YC is doubling down on these investment theses in its most recent batch
Nearly 200 startups have just graduated from the prestigious San Francisco startup accelerator Y Combinator . The flock of companies are now free to proceed company-building with a fresh $150,000 check and three-months full of tips and tricks from industry experts.
As usual, we sent several reporters to YC’s latest demo day to take notes on each company and pick our favorites. But there were many updates to the YC structure this time around and new trends we spotted from the ground that we’ve yet to share.
CTO and HR demo days
Powered by WPeMatico
Startups Weekly: VCs are drunk on beverage startups
Hello and welcome back to Startups Weekly, a newsletter published every Saturday that dives into the week’s most noteworthy venture deals, fundraises, M&A transactions and trends. Let’s take a quick moment to catch up. Last week, I wrote about an alternative to venture capital called revenue-based financing and before that, I jotted down some notes on one of VCs’ favorite spaces: cannabis tech. Remember, you can send me tips, suggestions and feedback to kate.clark@techcrunch.com or on Twitter @KateClarkTweets.
This week, I want to share some thoughts — questions, rather — on beverages. Just as my inbox has been full of cannabis-related pitches, it’s also been packed with descriptions of new…drinks. Perhaps the most noted so far is Liquid Death, canned water for the punk rock crowd, because why not? Liquid Death has attracted nearly $2 million in funding from angel investors like Away co-founder Jen Rubio and Twitter co-founder Biz Stone. Before I tell you about a few other up-and-coming beverage makers, I must beg the question: Does the beverage industry need disrupting?
Founders say yes. Why? For one, because millennials, according to various studies, are consuming less alcohol than previous generations and are therefore seeking non-alcoholic beverage alternatives. Enter Seedlip, a non-alcoholic spirits company, for example. Or Haus, launching this summer, an all-natural apéritif distilled from grapes that has a lower alcohol content than most hard liquors. Haus, like any good consumer startup in 2019, is shipped directly to your door.
Beverages are being disrupted, there’s no stopping it. pic.twitter.com/DMEg88t4iO
— Kate Clark (@KateClarkTweets) May 21, 2019
Bev, a canned wine business that recently raised $7 million in seed funding from Founders Fund, thinks marketing in the alcohol industry is the problem. Founder Alix Peabody designed a line of female-focused canned rosé. If you’re wondering why alcohol needs to be gendered in such a way, you’re not alone. Peabody explained most alcohol brands cater to men, and that’s a problem.
“The joke I like to make is there’s a go-to type of alcohol for every type of bro and we just don’t have that for women,” Peabody told TechCrunch earlier this year.
Finally, the wellness movement is taking over, driving VCs toward some odd upstarts. From wellness chat and journaling apps to therapy substitutes to fitness companies, stick wellness in a pitch and investors will take a second look. More Labs, for example, is backed with $8 million in VC funding. The company is readying the launch of Liquid Focus, a biohacking-beverage that claims to “solve modern-day stressors without the negative side effects.” Finally, Elements, “an elevated functional wellness beverage formulated with clinical levels of adaptogens to give your body exactly what it needs in four categories (focus, vitality, calm, and rest) for specific cognitive functions” (damn, what copy), recently launched. It doesn’t appear to be funded yet, but let’s just give it a few months.
There’s more where that came from, but I’m done for now. On to other news.
I almost skipped IPO corner this week because no big-name companies dropped or amended their S-1s or completed a highly anticipated IPO, as has been the case basically every week of 2019. But I decided I better give a quick update on Luckin Coffee’s tough second week on the stock market. Luckin Coffee, if you aren’t familiar, is Starbucks’ Chinese rival. The company raised more than $550 million after pricing at $17 per share a little over a week ago. Immediately the stock skyrocketed 20 percent to a roughly $5 billion market cap; then came concerns of the company’s lofty valuation, major cash burn and uncertain path to profitability. Luckin has dropped around 25 percent since closing its debut trading day. It closed Friday down 3 percent.
Y Combinator, the popular accelerator program and investment firm announced this week that it has promoted longtime partner Geoff Ralston to president. This comes two months after former president Sam Altman stepped down to focus his efforts full-time on OpenAI. The promotion of Ralston is an unsurprising choice for YC, an organization that employs roughly 60 people, many of whom have been affiliated with it in one way or another for years.
Automattic acquires subscription payment company Prospress
Shopify quietly acquires Handshake, an e-commerce platform for B2B wholesale purchasing
Streem buys Selerio in an effort to boost its AR conferencing tech
As Amex scoops up Resy, a look at its acquisition history
The Los Angeles ecosystem is $76 million stronger this week as Fika Ventures, a seed-stage venture capital firm, announced its sophomore investment fund. Fika invests roughly half of its capital exclusively in startups headquartered in LA, with a particular fondness for B2B, enterprise and fintech companies. The firm was launched in 2017 by general partners Eva Ho and TX Zhuo, formerly of Susa Ventures and Karlin Ventures, respectively. The pair raised $41 million for the debut effort, opting to nearly double that number the second time around as a means to participate in more follow-on fundings.
DoorDash raises $600M at a $12.7B valuation
TransferWise completes $292M secondary round at a $3.5B valuation
Auth0 raises $103M, pushes its valuation over $1B
Canva gets $70M at a $2.5B valuation
Payment card startup Marqeta confirms $260M round at close to $2B valuation
Modsy scores $37M to virtually design your home
Sun Basket whips up $30M Series E
Zero raises $20M from NEA for a credit card that works like debit
Nigeria’s Gokada raises $5.3M for its motorcycle ride-hail biz
Our premium subscription service had another great week of interesting deep dives. This week, TechCrunch’s Lucas Matney went deep on Getaround’s acquisition of Drivy for his latest installment of The Exit, a new series at TechCrunch where we chat with VCs who were in the right place at the right time and made the right call on an investment that paid off. Here are some of the other Extra Crunch pieces that stood out this week:
- 10 immigration tips for luck-struck tech workers
- When will customers start buying all those AI chips?
- Takeaways from KubeCon; the latest on Kubernetes and cloud-native development
- Why startups need to be careful about export licenses and the Huawei ban
If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I discuss how startups are avoiding IPOs and VC’s insatiable interest in food delivery startups.
Powered by WPeMatico