Is YC worth it?
October 10, 2023
Ok fine, I’ll elaborate.
The YC deal
Note: I’m not a lawyer. Talk to your lawyer to understand exactly how SAFEs work. Also read the official YC docs here: https://www.ycombinator.com/deal/
The YC deal has 2 parts:
- $125k on a post-money SAFE for 7% equity
- $375k on an uncapped MFN SAFE
This works out to a total of $500k cash as soon as you get into YC.
You can think of the MFN SAFE as if YC is guaranteeing an investment in your first round at whatever terms you set with other investors—but you get the money right away.
For example, if you raise a seed round after the batch at a $10M post-money cap, the MFN SAFE will have its cap set at $10M, coming out to an additional 3.75% equity for YC. I wouldn’t consider this to be part of the “cost” of YC though, since it’s money you would have raised either way. It just makes your first raise a little easier.
So, in essence, the only real “cost” of YC is the 7% equity from the post-money SAFE. Plugging this into Paul Graham’s equity equation, YC needs to improve your company’s success by 7.5% in order to be worth it.
So, what do you get in exchange for that 7% equity?
Benefits of YC
- $500k cash as soon as you’re accepted
- 3-month batch with weekly office hours
- Demo day presentation to investors & media
- Office hours for the lifetime of your company
- Opportunity to sell to your batch mates as your initial customers
- Access to Bookface, the internal YC forum
- Boost to the front page of Hacker News for your Launch HN post
- Access to Launch YC
- Access to YC user manual
- Access to YC investor database
- Access to YC fundraising trends
- Access to YC lawyers
- Access to YC media connections
- Access to deals for most B2B software
- Access to Work at a Startup, YC’s job board
- Annual YC alumni reunion event
- Probably lots more that I forgot
Is YC worth it?
You’ll have to do that math for your own situation, but for myself and Basedash, I’d estimate that YC increased our success by well over 100%.
If you think the benefits are likely to increase your company’s success by anything more than 7.5%, then it’s a no brainer. YC is worth it.
This post is part of a series talking about my experience applying to and taking part in the Summer 2020 batch of Y Combinator with my company, Basedash. I wrote other posts about how to write a successful YC application, and everything you need to know to ace the YC interview. Give those a read if you’re thinking of applying!
Everything you need to know to ace the YC interview
How to write a successful YC application