This is how Y Combinator works, the accelerator of important tech apps
Y Combinator has become the economic support for various technology startups through seed funding.
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Seed funding, which is the earliest stage of venture funding, where the amount of money depends on the type of business you are starting, is one of the most complicated periods for any technology startup. This is not only because you don't know exactly how much funding is required to develop it, but also because it is a stage where the creators still have doubts about how the product will operate.
To help these developers strengthen and grow their projects, Y Combinator, through its seed funding program, seeks to help startup owners get through the first phase, paying for their expenses as they get started, on the one hand, and guiding them so that they can present investors with a solid product and thus raise money on a larger scale, on the other.
On the Y Combinator website they point out:
Some companies may need no more than seed funding. Others will go through several rounds. There is no right answer. We make small investments in return for small stakes in the companies we fund.
“All venture investors supply some combination of money and help. In our case the money is by far the smaller component. In fact, many of the startups we fund don’t need the money. We think of the money we invest as more like financial aid in college: it’s so people who do need the money can pay their living expenses while Y Combinator is happening,” it is underlined.
Three Month Plan
Through this successful program, through which several of the unicorns of Latin American origin have passed, companies can receive complete advice to answer all the initial questions of these ventures, questions that range from their name to their expansion plans.
Likewise, this company, located in the current Mecca of technology, Mountain View, California, advises companies to close a deal and connects them with potential investors and/or acquirers, also offering them all their support and protection throughout the process.
“We also get the startups we fund incorporated properly with all the standard paperwork, avoiding legal time-bombs that could cause serious hassles and delays later. We introduce founders to lawyers who will often agree to defer payment for legal work,” it is pointed out by YC.
The startup accelerator, which also helps start-ups find and hire their first employees, while providing advice on intellectual property, highlights: “One of the least publicized things we do, for obvious reasons, is mediate disputes between founders. No startup thinks they’re going to need that, but most do at some point.”
“Our goal is to be the preferred source of seed funding for startups, and to be that we have to do right by everyone. The good founders all know one another, so if the groups we fund feel they’re getting a bad deal, no one will want funding from us in the future. And later stage investors (especially VCs) also tend to know one another, so if the companies we seed end up being broken in any way, no one will want to invest in them in the future,” it is highlighted.
Twice a year, between January and March, and from June to August, they participate in investment rounds with a small amount of money in a large number of startups.
Although it has sometimes been described as a bootcamp, since they work with different firms at the same time, financing new companies in batches has proven to be an efficient method for YC and for new companies.
“We think founders are most productive when they can spend most of their time building. Our goal is to create an environment where you can focus exclusively on building product and talking to users. We seem to have succeeded in creating a good environment, because many founders have told us that the first ten weeks of Y Combinator were the most productive period of their lives,” they said.
The list of benefits and resources available to YC founders can be found here.
To apply to Y Combinator click here.