March 7th, 2023 | How To Write Successful Applications For the Top Startup Accelerators? On the Example of Y Combinator.
Admission to the Y Combinator acceleration program is the dream for thousands of founders of Software-as-a-Service platforms worldwide. And for a good reason: this iconic accelerator not only offers an attractive seed investment for your company, but also secures top-notch mentoring.
But how to successfully apply? to approach this question, I analyzed a repo of 32 successful YC applications openly available online. Here, I introduce my conclusions.
Why Y Combinator?
Admission to the Y Combinator acceleration program is the dream for thousands of founders of Software-as-a-Service platforms worldwide. And for a good reason: this iconic accelerator not only offers an attractive seed investment for your company ($125,000 on a post-money safe in return for 7% of the company and $375,000 on an uncapped safe with a Most Favored Nation provision, please read more HERE), but also secures top-notch mentoring and networking opportunities.
With early investments in such giants as Stripe or AirBnB, and founders and partners such as Paul Graham, Michael Seibel, or Dalton Caldwell who’ve become icons of pop culture, Y Combinator is THE place to be.
Twice a year, around March/April, and September/October, the streets in the Bay Area get empty as all founders close themselves at home to work on their YC applications for the incoming batch of their acceleration program.
But how to get there in the first place? With about 200 investments in every batch, Y Combinator has less than 1% acceptance rate. The bottleneck is really narrow — narrower than the most prestigious academic grants!
After all, applying for funding from accelerators shouldn’t be much different from applying for grants: you learn about the demand, the preferred style and content of the applications, and you adjust to these standards. Therefore, to approach this question, I analyzed a repo of 32 successful YC applications openly available at Shizune.
What Do Successful Applications Teach Us?
I’d like to note that the observations summarized below are not a proper research study, i.e., successful applications were not compared with a corresponding, “control” pool of unsuccessful applications.
One reason is that, while it is easy to find random, bad applications which are not fundable for obvious reasons, it is hard to find applications that landed just below the threshold and were eventually rejected.
So, here are my observations:
A. What Types of Projects Make It.
It seems that just as the public opinion believes, YC indeed focuses on funding Software-as-a-Service (SaaS) platforms, with no hardware pegged to it. Among 32 successful applicants, there were no cases of new, proprietary software such as, e.g., novel Large Language Models (LLMs), VR technology, or innovative blockchain architectures. Instead, the core of the innovation lies in the new business model, or application of existing business model to a new target group.
2. In-house Development.
In general, applying founders can program and develop or co-develop the MVP using their own hands, although there are cases when the MVP was created by contractors. Of course, for YC, the ownership of the Intellectual Property (IP) is the key here — they need to know that as an applicant, you possess all the IP.
3. B2(S)B As the Most Common Model.
Despite the most famous YC investments being B2C platforms, ~60% of successful applicants seem to be “B2SB” (Business to Small Business) platforms: solutions helping small to middle-size businesses in streamlining operations and cutting costs of logistics, accountancy, and labor.
4. An Open Conversation About an Elephant in the Room.
Successful applicants don’t even try to find a niche where there are no competitors or convince YC that they are unique, but rather, know they are painfully aware about competition and potential future threats. All 32 successful applicants named their main competitors and made an effort to differentiate themselves by introducing new features, tweaking the business model, or pitching to a different target group.
5. Flexible Monetization Strategies.
Successful applicants seem flexible and open-minded about the ways of monetizing their platforms. Usually, they are at the stage of testing options and have some ideas for the future monetization streams.
I guess it is important to give a feeling that you are willing to take suggestions on board and experiment with monetization strategies for as long as it takes to achieve the product-market fit.
B. What Kinds of Teams Make It.
1. Solo or as a Team?
Interestingly, many successful applicants are solopreneurs (e.g., MagicBell, Dendron, TryVirtually, One Month Rails) with previous experience in building software. If there are two or more founders on the team, they usually know each other for 5 years or more and worked together before, either as employees, or by building another startup together.
There are cases when founders met just 1-2 years before, but it was always in a “natural” way (at work, on travel, at a conference, or at a hackathon) and they developed the idea together. None of the successful teams was formed at a match-making event for founders or on a match-making platform. Which is an interesting outcome given that YC runs the “founder matching” platform.
ADVICE: If you are a sole founder, it makes little sense trying to find a co-founder at the last moment. Perhaps it’s better to focus on polishing the MVP and surrounding yourself with good contractors and advisors.
2. Motivation To Start a Project.
About 50% of founders started the project to solve their own problem which is consistent with the saying “start with your own pain.” Another 50% just noticed a market niche and have no emotional attitude to the problem they are solving.
3. Project History.
Some applicants had been working on their project for 2 weeks, others for 5+ years — there is no rule here. However, all projects had MVP ready at the time of the application.
About 60-70% applicants were applying for the first time, while the remaining 30-40% were second- or even third-time applications. In all those cases, the founders explained the progress since the last application.
4. Founders’ Experience.
Founders of successful startups often have a prior history of building innovative solutions (their previous companies were successful). And of course, some of the applicants had also participated in the YC Startup School before applying, but usually, they treated the course as a way to prepare for the YC application, not as a real crash course in business.
Apparently, YC aims to catch talented, promising people with a large body of experience at early stages of developing their next project, so that they can get in early and scoop a large chunk of the project. So, if you have never built anything before and you believe that participation in the YC Startup School is what will open the door for YC for you, think twice.
C. At What Stage of Development are the Successful Applicants?
1. Business Structure.
No surprise here: the most common business structure among successful applicants is Delaware C Corp. Some of the teams declared the willingness to set up this structure only after they are funded. Some of the international teams had no plans to move to the US with their company.
2. Prior Investment.
The common view at investments in startups is that once you get an investment, it becomes easier to attract new investors. However, it seems that YC highly prefers to take applicants with no prior investment board. Among 32 applicants, only one startup had 2%-share from an angel investor, all the remaining applicants owned the full pie.
It looks like YC has developed a process for onboarding startups and likes making things easy for themselves from the legal point of view: a fresh, uncut Delaware C Corp with no investors onboard is their preference.
3. Revenue To Date.
While some applicants had considerable profits at the time of the application (e.g., InEvent: ARR > $1 million, 30 employees and contractors on board), many companies had MVP only or very tiny profits / few users. Examples: Dendron: a micro-community of 100 active users, MagicBell: 999$ in profit, Metlo: 150$, TryVirtually: $1,540, PayStack: $1,300, Shotput: $110.30).
It seems that YC is more interested in your growth in terms of relative than absolute numbers (e.g., “This month we made $100 dollars, which is 200% MOM since last month when it was only $50).
ADVICE: before applying, get at least one paid client to prove the concept — you don’t need much more. Turning close friends into first paid clients and promoting the solution through word of mouth is totally OK. Technically, you could even find a sparring partner who is also applying to YC and sell each other your services — badass solution but should count.
4. Growth Strategy.
Most founders have a vague way of describing how they are going to overcome the “chicken-and-egg” problem and get users.
Example: the founder of “TryVirtually” declares: “Most of our initial users have come from my pre-existing relationships with creators. We’ve generally found that content creators are vocal about the software that they enjoy using and for that reason we expect they will be our biggest engine for growth.”
Also, there are many ways of getting paid users beyond paid advertising or word of mouth — any creative ways are welcome. For instance, Lollipuff (an online auction house for authentic women’s designer goods) gets clients solely via converting readers of their blog dedicated to fashion. Another project, One Month Rails (a platform teaching coding in one month) acquires their clients through converting their free Skillshare course participants (with about 10% conversion rate).
It seems that with growth strategies it works similarly like with monetization strategies: pro than anything else, YC expects flexibility and open mind. They are so competent at growing startups and they have so much experience that they will help you grow as long as you are cooperative, follow the advice, and do the heavy lifting.
5. The Project Website.
The frontend of most of the successful projects is quite simplistic even years after receiving YC funding, check e.g. landing pages from Try Virtually, Prolific, or Mix Panel. There is nothing fancy or visually impressive about these landing pages, which means that you don’t need to invest time and money in the frotnend of your platform; a simple commercial design will do the job.
D. In What Style Are the Applications Prepared?
1. The Company Headline.
In the YC application, you need to describe your company in 50 characters or less. Needless to say, this headline should give a clear picture of what the company does.
Some general advice from Paul Graham (Co-Founder & Partner at Y Combinator) for how to build a headline is as follows:
“One good trick for describing a project concisely is to explain it as a variant of something the audience already knows. It’s like Wikipedia, but within an organization. It’s like an answering service, but for email. It’s eBay for jobs. This form of description is wonderfully efficient.”
Some successful examples:
“Notion for Developers” — Dendron
“Backup and share files in the cloud” — Dropbox
“Helps families stay in touch” — FamilyLeaf
Applications tend to use simple, informal language: brief writing, one-paragraph responses to the questions, rather casual style with occasional street language.
Examples of Easter eggs that I found in the applications:
Dendron: “While the concepts of hierarchies are not new, hierarchies have never been used to their full potential in note taking tools. This is because the tooling around them sucks.”
“For the past year, I’ve built intimate relationships with 30+ influential content creators and online educators.” — TryVirtually
“Today people resort to Microsoft Excel (yes, I know).” — InEvent
“We think there’s no dominant player because nobody has made anything good yet. Our goal is to be the best.” — Apptimize
“Honestly, the current online resources focused on teaching people how to code just don’t cut it.” — One Month Rails
3. Facts Not Opinions, Personality Not Ego.
Furthermore, successful applicants DO NOT use popular buzzwords such as “impact,” “contribution,” or “sustainable” and all that pseudo-political jargon. They describe but not judge their creation. E.g. they call their platform “new” not “innovative” or ”unique.” Or, “world’s first” not “world’s best.”
They also avoid expressions that would suggest big ego. They don’t mention any societal impact at all, but rather, they fully focus on: (1) the problem they solve, (2) what their solution does, (3) the Total Addressable Market.
Successful founders are humble. Even in the question about prior personal achievements of the founders, they tend to be brief and only mention their biggest achievements without getting much into detail.
At the same time, they demonstrate their colorful “startup personality.”
In the last question in the form “Please tell us something surprising or amusing that one of you has discovered,” they often give answers that demonstrate self-confidence. Some examples:
“Users have the tendency to defy your expectations all the time. If you don’t listen, you won’t survive.”
“Children are useless until around the age of three. I never thought it would take them that long to become real people.”
To sum up, this writing style suggests the personality sought in the startup world: focused, concrete, down-to-earth, oriented on the target, humble and with no ego, but at the same time confident and colorful.
4. The Text Volume.
Applications are really brief — every answer is as concrete and concise as possible. Also, not all questions in the application need to be answered.
For instance, some of the successful applicants did not respond to the question “Please tell us something surprising or amusing that one of you has discovered” at all. Most applicants did not answer the question “Please tell us about the time you most successfully hacked some (non-computer) system to your advantage” either.
5. The Application Videos.
It turns out that the founders’ intro does not need to be shot in high quality. It can be arranged in quite an amateur way, see e.g. the pitch by the Virtually founder. However, successful founders stick to the requirements and indeed take about 1 minute (+/- 15 seconds) to pitch via YouTube as recommended (no longer than that!).
Company demo also does not need to be fancy. It can be a simple infomercial that a Fiverr subcontractor can create for $20, see e.g. the demo from Prolific.
Conclusions: What Does YC Team Expect and Do YOU Stand a Chance?
Of course, there is no bullet-proof algorithm to get into YC or any other startup accelerator. At the end of the day, it is also someone’s subjective decision. Just as with job- or grant applications, it is a game of probabilities. Of course, there are exceptions from every rule bur the best you can do is to increase your chances by sticking to the convention that is proven to work for others.
If you are a fresh founder with no prior experience, the YC Startup School in itself probably won’t help in getting in. However, if you have experience and an MVP of a new, hot platform, taking part in the school as well as watching the YC Youtube channel will likely help you in learning about the YC’s values and vocabulary necessary to attract them to your project.
Please cite as:
Bielczyk, N. (2023, March 7th). How To Write Successful Applications For the Top Startup Accelerators? On the Example of Y Combinator. Retrieved from: https://nataliabielczyk.com/how-to-write-applications-to-top-startup-accelerators-Y-combinator/
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