{"id":1202015,"date":"2022-09-10T18:01:03","date_gmt":"2022-09-10T18:01:03","guid":{"rendered":"https:\/\/www.ghanamma.com\/2022\/09\/10\/what-227-y-combinator-pitches-will-teach-you-about-startups\/"},"modified":"2022-09-10T18:01:03","modified_gmt":"2022-09-10T18:01:03","slug":"what-227-y-combinator-pitches-will-teach-you-about-startups","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2022\/09\/10\/what-227-y-combinator-pitches-will-teach-you-about-startups\/","title":{"rendered":"What 227 Y Combinator pitches will teach you about startups \u2022"},"content":{"rendered":"

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Welcome to Startups Weekly, a fresh human-first take on this week\u2019s startup news and trends. To get this in your inbox, <\/em>subscribe here.<\/em><\/p>\n

In some ways, Y Combinator\u2019s biannual Demo Day is somewhat predictable: There will be Stanford dropouts, last-minute pivots, and, as always, promises of near-term profitability. We even made a bingo board about it.\u00a0<\/p>\n

But one thing I can never guess ahead of time is the exact priorities of the season\u2019s batch. Y Combinator stands by the fact that it backs people, not ideas, so its Demo Day technically unveils two things: who the accelerator bet on and what they decided to prioritize. This year was different for myriad reasons. First, YC Summer 2022 is the second batch to receive a $500,000 check instead of $125,000, as part of the accelerator\u2019s expanded check size. Second, the batch was smaller than usual (see previous versions of this column here and here; it\u2019s a different tone altogether) \u2014 a narrowing of focus the accelerator says was due to the downturn. And finally, it was the first batch where we saw a bifurcation; over 60% of batch founders were in the Bay Area during the three-month accelerator, while others remained scattered across the world.<\/p>\n

All those tensions are great for story ideas. So, this week when covering YC\u2019s latest batch, we set out to give readers a better understanding of the problems that startups are prioritizing during the downturn and how YC\u2019s shake-up has impacted the firm\u2019s focus in certain areas and geographies versus others.<\/p>\n

I\u2019m proud of how we executed despite all the iPhone news. We wrote about how YC\u2019s fintech founders are returning to the neobank train\u00a0and crypto continues to be an area of bullishness. We dug into artificial intelligence standouts and creator economy knockouts. And before I start sounding like an especially nerdy rendition of Dr. Seuss, we looked into a geography focus from a macro scale and a retreat on a micro scale.\u00a0\u00a0<\/p>\n

This in mind, as in tradition, I want to leave you with a few takeaways I had after listening to hundreds of pitches. Here\u2019s what 277 Combinator pitches taught me, and now maybe you, about startups:<\/p>\n

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  1. Ideas, then people or people then ideas: <\/strong>There\u2019s two camps of investing in startups, the check writers who invest in disruptive ideas and then the various groups of people trying to make those same ideas a reality; and the check writers who invest in people and then support those same people in whatever disruptive idea they swing at. Y Combinator asserts that it\u2019s more of the latter not the former. But, data says differently. Last batch, 29% were accepted with only an idea; this batch, 43% were accepted with only an idea. It means that over time, YC is getting more comfortable backing founders who have an idea; not necessarily less. Something to think about when looking at trends and how one of the most well-known accelerators thinks about breakdowns.<\/li>\n<\/ol>\n
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    \n

    A common investing trap:<\/p>\n

    Investing in a startup because its a dope idea or a business that should exist<\/p>\n

    Most businesses that are \u201cgood ideas\u201d will have lots of teams competing to win, and your job is to back the winning team<\/p>\n

    YC alone is now backing many teams per good idea!<\/p>\n

    \u2014 Ankur Nagpal \ud83d\udd25\ud83d\udd25 (@ankurnagpal) September 7, 2022<\/a><\/p>\n<\/blockquote>\n<\/div>\n

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    1. It\u2019s a fintech accelerator, first: <\/strong>Whoops, my bias is showing. YC feels more and more like a fintech and crypto accelerator than it does a consumer and biotech accelerator; you can tell that based on the breakdown of startups within each batch but even from the format of Demo Day. It\u2019s hard to tell a biotech or climate story with one slide in one minute while the format actually helps a startup trying to make financial services easier.<\/li>\n
    2. The moonshots aren\u2019t going anywhere:<\/strong> One theory I had going into the batch is if bigger checks, even despite a downturn, will lead to bigger swings in the batch. We weren\u2019t disappointed. Moonshots include faux fish, alternative investing in athletes and another ambitious play in the world of DTC healthcare.<\/li>\n<\/ol>\n

      In this week\u2019s digest, we\u2019ll get into some startup consolidation, Kim Kardashian and the latest on layoffs. Make sure to read the whole piece as I\u2019ve snuck in a TC+ discount code, especially for Startups Weekly readers, in the post.<\/p>\n

      If you like this newsletter, do me a quick favor? Forward it to a friend, share it on Twitter and tag me so I can thank you for reading myself!<\/a><\/p>\n

      Startups, get scooped<\/h2>\n

      We don\u2019t talk about liquidity enough here, and I partially blame the fact that the M&A market has felt quite dry over the past few months. Thankfully, we have a few of note to mention this week.<\/p>\n

      Amazon bought Cloosertermans, a mechatronics specialist that will help it beef up its robotics arm. TC\u2019s Ingrid Lunden reports that the startup has been \u201dbuilding technology to move and stack heavy palettes and totes, and robotics used to package products for customer orders.\u201d The attention from Amazon isn\u2019t new: Amazon has been a Cloostermans customer since 2019, but the acquisition makes things a lot more formal.<\/p>\n

      There\u2019s also an acquisition from Instacart, which has been busy ahead of its impending public market debut. The grocery delivery company announced that it acquired Rosie. It will widen the company\u2019s footprint for local and independent retailers.<\/p>\n

      And, to end the week, we have online grocery company Misfits Market announcing it will acquire Imperfect Foods. I love when Misfits and Imperfects team together.<\/p>\n

      Here\u2019s why it\u2019s important:<\/strong> More consolidation gives us some much-needed signals on how the exit environment is doing these days. For early-stage startups, especially those that are struggling to raise another round, the future could look like becoming acquisition fodder (and that\u2019s not bad news).<\/p>\n

      \n

      Image Credits:<\/strong> Caiaimage\/Adam Gault \/ Getty Images<\/p>\n<\/div>\n

      VC works hard, but Kim Kardashian works harder<\/h2>\n

      Kim Kardashian announced this week that she is breaking into the private equity world with SKKY Partners. Her firm, done in collaboration with ex-Carlyle partner Jay Sammons, has not yet raised its first fund but does plan to make its first investment by the end of the year.<\/p>\n

      Here\u2019s what\u2019s important: <\/strong>It\u2019s the financialization of trendsetters, as we discussed on Equity. We\u2019ve seen influencers land partnerships, start companies, score equity in startups, but PE would be a different level \u2014 even for a Kardashian.<\/p>\n

      \"Kim<\/p>\n

      Image Credits:<\/strong> Nathan Congleton\/NBC \/ Getty Images<\/p>\n<\/div>\n

      The follow-up<\/h2>\n

      I\u2019m experimenting with a new section in Startups Weekly, where each week we follow up with an old story or trend to see what\u2019s changed since our first look. We haven\u2019t talked about layoffs in a bit around here, so without further ado\u2026<\/p>\n

      Here\u2019s what\u2019s new: <\/strong>Patreon has confirmed it has laid off five employees from its security team. It will lean on external organizations to develop security capabilities. There\u2019s also some tensions leaking out of Aurora while Nigerian digital bank Kuda is the latest African startup to lay off employees.\u00a0<\/p>\n

      \"\"<\/p>\n

      Image Credits:<\/strong> Patreon<\/p>\n<\/div>\n

      Wait for it. See it? Yep, I\u2019m excited too. And while we\u2019re on the topic of housekeeping, some more notes:<\/p>\n

      Seen on <\/em><\/p>\n

      As a scuba diver, I would gladly trust my life to the Apple Watch. Here\u2019s why.<\/p>\n

      Brex\u2019s departing CRO explains his decision to join Founders Fund<\/p>\n

      People are going back to the office \u2014 except in the Bay Area<\/p>\n

      Byju\u2019s has no answer for its growing list of missing deadlines<\/p>\n

      YC Demo Day did not have a very long list of creator companies, but here\u2019s who stood out<\/p>\n\n

      To thank you for being a Startups Weekly subscriber, here\u2019s a little TC+ discount for you: Enter \u201cSTARTUPS\u201d at checkout for 15% off of your subscription.<\/p>\n\n

      Seen on +<\/em><\/p>\n

      These are the top 3 most important slides in your pitch deck<\/p>\n

      How the upcoming Ethereum Merge could change crypto\u2019s rewards, costs and reputation<\/p>\n

      Let\u2019s get in the weeds about fintech AUM\u00a0<\/p>\n

      As startups whip up a restaurant tech frenzy, is anyone close to Toast?<\/p>\n

      Can you believe it was technically a short week? Chat Monday.<\/p>\n

      N<\/a><\/p>\n<\/div>\n