Why more Spanish startups should apply to YC
This is a guest post by Daniel Lopez, CEO of Bitnami. He can be found on Twitter as @vomkriege.
Y Combinator, or YC as it is commonly referred to, started as an experiment by Paul Graham in 2005 to encourage students to launch a startup instead of joining an established company.
It has grown over the years to become one of the most successful early stage investment programs in the world. It has funded over 1500 companies with a combined valuation exceeding $100 billion USD, including Airbnb, Reddit, Twitch, Heroku, Stripe, Dropbox and many others … of which only two are Spanish. Bitnami, the company I co-founded, is one of them.
As a group, and given the quality of startups and founders I meet in Spain on a regular basis, we are completely under-represented. I am writing this article to encourage other Spanish founders to apply to YC, as it is a fantastic opportunity that not enough people take advantage of.
How YC works
The program itself is very straightforward. Twice a year, YC invests a small amount of money in a large number of startups. Currently it is $120,000 in exchange for 7% equity. Each of these groups of startups is named a ‘batch’.
The winter batch runs from January to March and the Summer batch runs from June to August. Batch size varies over time, but currently is well over 100 companies. During those three months, founders should focus on a couple of things: talking to customers and working on the product. Other than that, they are encouraged to exercise and rest to avoid burnout.
Unlike other similar programs, YC does not provide offices or shared co-working spaces as they tend to be a source of distraction and hurt productivity. Speaking of distractions, you are actively discouraged to attend networking events, tradeshows and take on meetings that are not directly related to actual users of your product.
During the duration of the batch there are weekly dinners in which a speaker, usually founders themselves, share their experience in the industry. What makes these talks special is both the quality of the speakers (in our batch it was people like Ron Conway, Peter Thiel or the Airbnb founders) but also that they can speak candidly about what really goes on while building a company. This is possible because YC has a strict off-the-record policy that has (to my knowledge) never been broken, which is remarkable if you take into account the large number of attendees.
The weekly dinners serve another important purpose: get the founders in the batch to get to know each other, compare notes, show their progress, etc. A lot of friendships develop this way that carry over the years. Socializing at the dinners is also a bit of a relief after spending the rest of the time heads down working on your product!
You can also schedule time to talk to partners, known as “Office hours”. These are very focused meetings in which you typically discuss the biggest obstacle that you are currently facing. Chances are, they have seen that exact problem before or at least can point you in the right direction.
At the end of the batch, there’s Demo Day, an event in which you get a few minutes to present to a room of investors that are pretty much the who’s who of Silicon Valley. This is a very efficient way to raise funding on both sides, so you can go back to what’s important: building your company.
On the surface, what I have described is very similar to what other accelerator or incubator programs provide, usually with much fancier names and offices! So, what makes YC special?
In my experience it is the people.
You will be getting advice and mentoring from incredibly talented and experienced individuals, who know first hand what it takes to build a successful company. Because so many companies have gone through the program and have seen what works and what does not work, they are able to extract lessons that they can share with everyone else. There is no magic piece of advice that is going to solve all your company problems, but it is often helpful to learn how others dealt with similar issues.
In addition to the partners, you get access to the YC network of founders where you can get advice and help and, often, your first customers. This works both ways, you are expected to also help others when they reach out. Personally, we have benefitted from this enormously and gladly do our best to help other YC companies in our areas of expertise.
Finally, everyone at YC deeply cares about the founders and will look out for them, even if it would be in their short-term interest to do otherwise. Many VCs and investors proclaim to be founder-friendly but end up screwing said founders when the going gets rough or there’s a lot of money to be made. I have witnessed the exact opposite with YC multiple times, doing the right thing for the founders, even if nobody’s looking and even if it meant standing up to powerful people and organizations.
As an example, when we were discussing applying for YC I talked to over a dozen founders that had gone through the program. I had heard so many good things about the experience that I was actively looking for some counter point, for somebody who had something negative to say. I was unable to do so. I talked to founders over Skype, on the phone, in person. I talked to some founders who had been incredibly successful and to others that had failed completely. Every single one of them recommended that we join, if we were selected. The only people that had negative things to say were people that had never actually gone through the program!
Going back to the original reason why I wrote this article … if everything is so great about YC…
Why don’t more Spanish startups apply?
That’s the question I ask myself. I don’t have all the answers but my guess is that it is a mixture of lack of awareness about the program and some misconceptions. Though it is a bit of a chicken and egg problem, I am confident that as more Spanish companies go through the program, more founders will learn about it and consider applying.
Among those that are aware of YC, there are also some myths and assumptions. The ones I hear more often from Spanish founders are the following:
- That it’s only for US companies: about a 3rd of the companies are from outside the USA
- That you are too late/too early stage to apply: some companies applied with just an idea, others joined with 20MM in revenue
- That you need to know somebody or have some type of recommendation: more than half of the companies accepted did not have any recommendation.
As you can see, people put a lot of effort creating imaginary barriers that don’t exist in reality!
One real barrier, however, is not discussed often enough: the language barrier. A lot of founders should spend more time improving their English, especially if they expect to compete at a global level. If you are not able to clearly describe your product and paint a compelling picture, it is going to be significantly more difficult to get funding, recruit talent or convince large customers to sign on the dotted line.
You don’t need to participate in YC to benefit from it. Over the years YC has been building a lot of initiatives to help founders and spread knowledge such as Startup School, the YC Blog and the YC podcast. But the real benefit comes from participating in the program and you should consider applying. Even if you don’t press ‘Send’, the process of answering the questions is often useful in and of itself.
If you live in Madrid, I will be giving an in-person talk on Tuesday Feb 13th at 7pm about our experience and will be happy to answer your questions.
We are K Fund, a €50 million early stage Venture Capital firm based in Madrid that’s looking to back the best and brightest Spanish entrepreneurs, wherever they might be. We truly believe in the Spanish tech ecosystem and we’re here to make it bigger as a whole.
If you have an interesting project or startup that fits our investment criteria, please send us your information by filling this form in.