- Y Combinator (YC) is excited to announce that their Summer 22 batch will be in person, marking the first time since winter 2020.
- The founders of the batch will have an in-person retreat in Sonoma and weekly meetups in San Francisco, with additional meetups organized in other cities around the world.
- YC has built software to help founders connect and have one-on-one coffees with each other in the same city.
- There will be a large end-of-batch celebration in San Francisco after demo day, including both the current batch and alumni.
- The program will still be friendly to remote founders, with batch talks and office hours remaining online.
- YC has noticed an increase in applications for the Summer 22 batch, and more founders are showing interest in building strong technical teams.
- Founders who are excited about building something and solving problems for users are still applying to YC, and some see the current environment as a strategic time to start a startup.
- There is a trend of founders wanting to be a part of a startup ecosystem rather than building one themselves.
- More founders are showing interest in relocating to San Francisco and other major cities.
- YC recently sent a letter to founders about the economic downturn, and founders have responded well by evaluating their specific situations and making the right moves.
- YC aims to talk up to their founders and provide feedback that helps them take a sober look at their situations.

- YC alums have responded positively to a recent letter, taking a sober look at their situations and making necessary changes.
- The new Standard Deal was not created to compete with other seed funds, but to ensure companies are fully funded and prepared for market changes.
- YC founders have been able to raise seed rounds with less dilution due to the new deal, giving them confidence in fundraising.
- YC's focus is on giving founders what they wished they had when they were founders themselves.
- YC alums are watching these videos and appreciating the direct communication from YC.
- YC is excited to meet the next batch of founders and plans to hold a massive alumni event in San Francisco in the fall.

Dalton Caldwell and Michael Seibel provide an update on the upcoming Summer 2022 batch along with the changes and trends they've noticed in the startup world today.

Apply to Y Combinator: https://yc.link/DandM-apply
Work at a Startup: https://yc.link/DandM-jobs

#startups #business #tech 

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - Intro
00:29 - In-Person events
02:14 - Summer 22 batch trends
03:04 - Hype cycle
05:03 - Tech relocation
06:57 - Where the action is
08:04 - Economic downturn
09:35 - Sober analysis
11:03 - New standard deal
14:24 - Old standard deal
16:36 - Guiding principle
17:53 - Alumni audience

We have a grand nefarious strategy of giving founders what we wish we had when we were founders.

Yeah, it's like what would I have wanted?

Yeah, like that's certainly how I think about this.

This is Michael Seibel with Dalton Caldwell.

Today, we actually have some news to announce.

For the first time since winter 2020, this new batch, the Summer 22 batch, will be in person.

Dalton, we're gonna get to see founders in person again.

I've been spending a lot of time in this little room, much as probably you have too.

So the founders of this batch are going to have an in-person retreat in Sonoma to kick the batch off.

They're gonna be able to go to weekly meetups in San Francisco.

We're actually going to help organize weekly meetups in other cities around the world.

We built some software that are going to help founders meet each other and have one-on-one coffees, founders in the same city.

And then we're gonna have a huge end of batch celebration after demo day in San Francisco with all the batch and the alumni.

Needless to say, the program is still gonna be friendly to founders participating remotely.

So the batch talks, office hours, things like that will still be online.

And we still have founders from all over the world participating.

But I have to say, founders I've talked to in every country have been excited to come here to meet us, to meet their batch mates, to get out in front of Zoom and get off these cameras for a little while.

Yeah, we kind of had a dry run a little bit last batch where there were a lot of these in-person meetups.

The idea that we get to re-announce something that was so core to YC is actually quite fun.

What other trends are you seeing for the summer 22 batch?

Yeah, I mean, let's see, to go through some of the stuff I've noticed.

I think that's always a trend, but there's definitely more applications.

And you know, I think the new YCDL doesn't hurt on that 1.

And so, yeah, more applications, more applications to read.

I'm seeing teams be slightly more technical, which is exciting.

I mean, when you work with strong technical teams, we talk about taking punches.

It's always much more enjoyable work with strong technical teams.

But, you know, over the last, you know, let's say 3, 4 months, what are you seeing overall in our world?

I think that people that want to do a startup because they're excited about building something and solving stuff for users, those people are still applying.

If anything, those folks that aren't making fear-based decisions are more excited to apply to YC and do this almost because it's more rebellious or anti-something to do a startup when it's less cool to do it.

Again, if you, if you actually look at the YC data, some of the best companies we've ever funded happened when either there was a full downturn or at least a blip, I think we can call it a blip.

But look at when Stripe was founded, look at when Airbnb was founded, look at when Dropbox was founded, right?

Yeah, it's a weird trend because I agree with you.

It's both a little bit like, I wanna go against the flow, there's that set of founders, but there's also the set of founders who are just strategic, who are just like, hey, look, in the middle of the hype cycle, hiring is harder, getting access to customers is harder.

Like 17 of your competitors are going to all get funded.

Like, you know, It's weird because on the surface, the hype cycle looks good, but when you actually get into the dirt, the hype cycle hurts just as much as it helps.

And so I'm starting talking to founders in this batch who are like, yeah, no, this is actually like, they're not wishing for a downturn, but they're like, this is the time when it's strategic to get in the game.

Yeah, make hay while the sun shines, right?

This is where, oh, cool, you know, the price of Facebook ads is dropping.

Oh, cool, like all These factors are changing.

And so if you're like well-positioned, this is when you go on offense.

You're not like defensively, oh, I'm gonna hide.

There's a lot of folks that we talk to that are like extremely ready to go on offense.

Yes, yes, they've been waiting for this moment.

Now we're also seeing a lot more interest in San Francisco and like, I don't know, like that's a dirty word.

I'm not sure if I'm allowed to say the term San Francisco because we all know the tech world doesn't exist here anymore, right?

There was so much content marketing trying to FOMO everyone, that everyone was moving into whatever, insert city name, whatever the city was, this is the next capital.

And then there was a lot less content marketing of all the people that moved back.

And so again, I don't know who you're talking to, but a lot of the folks I've talked to, quiet, you know, that were loudly talking about moving away to whatever city name, you know, they're much more quiet on the move back.

Yeah, I'm not seeing as many, I'm not seeing as much of that.

But yeah, I think a lot of folks are moving back right now.

It just seems like people are going back to the big centers because they're getting bored and lonely and feel kind of over it.

Again, this is what I'm learning in Office Hours, man, is that people, they wanna be where the action is.

know, I think you're saying it the right way.

I think the founders I talked to, they don't wanna build a startup ecosystem, they want to be a part of a startup ecosystem.

And it's been interesting, because we saw it, you know, first in the end of batch survey when we asked people about, oh, as we add more in-person components, and it was like almost unanimous, the founders in the previous batch were like, if you had told us something was happening in the Bay Area, we would have moved, you know, and like that was a response we didn't necessarily expect.

It's almost like you and I were convinced that that wouldn't be the case.

Like the content marketing worked on me too a little bit.

But it's like, it's not being borne out in the data that we have about, you get what I'm saying?

I kind of bought into the content marketing too, but we'll see.

I think the other thing that I'm seeing, and it's interesting because I've got a brother who's this age, a recent college grad.

I think what's so hard for a lot of people to see is that if you're a recent college grad, you don't want to stay in the city you went to school in.

In comparison, moving to the Bay Area is way better of an option than kind of your current setup over the last couple of years.

And so I think that a lot of that content marketing is unfortunately written by like people our age, people with kids, people living in San Francisco for like the last 2 years who were generally pissy about COVID.

And it was like less responding to someone who might've spent a year and a half remote doing college or living in some small college town locked down.

You know, like that kind of person is, San Francisco looks like a beacon.

I think you want to be where the action is, is I think how my summary is.

Versus feeling like you're in a, not where the action is.

So another thing that happened recently is we sent a letter to YC Founders about the economic downturn, which happened to maybe get a little bit of exposure to the general public.

But it was interesting because I've been really impressed with how the YC founders have responded.

I think that if you're smart, you know how to look at things like that as well as just general press or advice and apply it to your specific situation correctly.

If you're a two-person startup with no burn, what's happening in the late-stage fundraising environment in IPOs, if that's what you're worried about, man, you've got bigger problems, okay?

And so I think if you were able to say, well, what is my actual situation?

Because again, for some folks, the actual move is to go on offense.

Time to go hard against my competitors who have higher burn.

You know, like this is a great time if you're the underdog and your large competitor is in trouble.

And so I think that smart founders know what applies to them and what doesn't versus overly freaking out about things that have nothing to do with them.

You often talk about this, and it's something that I think is becoming part of the culture of YC, where we wanna talk up to our founders versus down to our founders.

Like, we wanna talk to the smartest kid in the class, not the dumbest kid in the class.

And I think sometimes in the general public, that's not well understood.

But I think within the YC community, it really is.

You know, feedback that we got from alums was universally, this caused me to take a sober look at my situation.

And if my situation was good, I'm staying on plan.

If my situation wasn't, I'm making changes.

And just to your point, it wasn't I'm freaking out.

It was like, okay, I'm gonna take a second and do a sober analysis of my company.

And I think what's unfortunate is that they had just gone through this 2 year cycle where investors were basically screaming at them to burn and raise, because investors were getting markups and they were raising new funds.

And so I think that in many ways, this letter gave them a lot of people the opportunity to say, okay, wait a second, like is that strategy actually good for my business?

And it's obviously good for my investors business.

You know, getting markups is obviously part of their business model, but is that strategy good for my business?

It's been fun to see the founders taking it in the right way.

Probably 1 of the last big trends is this new Standard Deal, right?

That was big news over the past 4 months.

And it's interesting because I think that in some ways it was conceived of competitively.

People were looking at the YC Standard Deal being like, oh, like YC is to compete, there's so many new seed funds out there.

And I think what's interesting is if you would kind of take it inside baseball for a second, that's really not the reason we did it at all.

Take us inside baseball a little bit, Dalton.

Yeah, I mean, the strategy was it's good for companies to get fully funded the moment we accept them.

And frankly, we saw some stuff that looked a little toppy, to use the

It looks like we're not sure that things were sustainable that everything would keep going up forever.

And so It seemed prudent to give the companies more money so that in the event of a market change, we were confident that everyone would be fully funded.

Again, for context, I think people forget this because of all the crazy seed round warped perceptions.

How much money did Airbnb and Dropbox and all those folks raise back in the day?

So we actually know that half a million dollars is slash was enough money to build like 1 of the most successful companies ever.

And it made a ton of sense to have this budget, to raise this money.

So that no matter what happens, if you get into YC, you're good.

There's this saying that I love, the best time to fix the roof is when the sun is shining.

And, you know, I look at our opportunity to create this new standard deal for YC founders and the fact that we have budget to fund over 1400 companies with this standard deal.

And I think to myself, like, you know, I'm so happy we did that when we could, because now we're gonna be able to help so many teams that otherwise might not be able to do startups, might not be able to raise money.

And not be sure, oh, I don't know if I wanna apply to YC, I don't know if I wanna start a company, because I'm afraid, I've read TechCrunch articles, the funding environment is rough.

Well, it's like, well, yeah, if you get into YC, you get half a million dollars.

And like the day we fund you, it's funny, like people, they almost, sometimes people don't believe us.

They're like, wait, this is contingent on something, right?

It's like, no, we give you the money up front.

No, but like, don't other accelerators, they have something where they take it back if you don't do it's like, no, like, if you don't kill anyone, you don't violate our ethics thing.

I think what was also interesting was to see how YC founders used the new standard deal in the last batch when they were fundraising.

You know, historically, seed funding could dilute companies 25, 30, even 35%.

I would say in more recent years that number was around 15 to 20 percent.

But we really saw a lot of founders able to get the money they need, raise their seed round with 10 percent, some even a little less, dilution.

I mean We all know those earlier rounds are where most of the dilution in the company happens.

The other thing, and I know you saw this in your group too, is just founders going into fundraising with confidence.

You know, we talk about this all the time.

We tell the founders be confident, but it's hard to be confident when you only have 6 months or 3 months of runway when you go into fundraising.

It's a lot easier to be confident when you come in with half a million bucks.

Yeah, I think the best founders were just very logical and non-emotional in the way they handle this.

The best way, imagine any financial transaction, you want to buy a house, You want to buy a car, you name it.

The more that you can be just not manipulated into being emotional or to be FOMO, like there's all these things.

If you could just be like, hey, I want to buy a car.

That's how you want to approach any kind of financial business relationship, right?

And so that's having this extra money helps people not be quite as susceptible to being told to be afraid, basically, right?

And it's such a weird thing to watch a founder simultaneously be almost negged by an investor and be told to raise more money from that investor.

Where the investor is like, your plan is never going to work.

If you take my money, then it'll all work out.

And it's like, I've been so happy to see why C Founders is able to kind of push back against all of that, and really be sober, Right?

Like, just be sober in your planning and things work out better.

It's just, it's funny, because like we always are optimizing for, you know, we're former founders.

I think it's like, what would have helped me when I was a founder?

And it's just funny how like doing that really seems to annoy investors that we're like, again, we're like giving away, we're like on the wrong team a lot.

Like I thought, like, isn't that weird, man?

I mean, isn't that like so funny because it's kind of 1 of the core guiding principles of YC when we think of what we're going to do.

And the opposite too, like what would I have thought of as bullshit?

Like how do we not do the stuff that I would have just like been like, that's bullshit, who cares?

It's just At the end of the day, more leverage for YC founders, good.

Again, like the folks that are in my group this batch, man, they're feeling good.

And probably the last trend, and maybe 1 of the most heartwarming trends, is how many alumni reach out to us and say they're watching these videos?

Like, how much has that come up for you in the last 6 months since we got this thing rolling?

I think when we first started recording these, my perception, I wasn't really sure who the audience was and maybe I'm still not sure, but it certainly would appear that a lot of YC alums are watching these, which is awesome that we have this direct line for people to hear from you and I personally about what's going on with YC.

I mean, it seems better than other forms of communication, right?

It was interesting because we put out a video.

It was interesting because we put out a public video about making sure that you are prepared for down economic times before we even sent a letter.

And 1 of the reasons we were inspired to send a letter was the number of alums who had watched that video and reached out and said, thank you for doing this.

And so I just think it's exciting to see that the YC alumni are watching these videos alongside prospective founders.

So in closing, we are really looking forward to meeting the next batch which is going to happen very soon, mid-August.

And then we're also ridiculously excited to meet all the founders that we've funded over the past years.

We're gonna do a massive alumni event in San Francisco in the fall.

And so for all the people we haven't seen in person yet, we'll see you soon.


Speaker 0: We have a grand nefarious strategy of giving founders what we wish we had when we were founders.

Speaker 1: Yeah, it's like what would I have wanted? Yeah, like that's certainly how I think about this.

Speaker 0: This is Michael Seibel with Dalton Caldwell. Today, we actually have some news to announce. For the first time since winter 2020, this new batch, the Summer 22 batch, will be in person. And we are all excited. Dalton, we're gonna get to see founders in person again.

What do you think?

Speaker 1: It's a breath of fresh air. I've been spending a lot of time in this little room, much as probably you have too. So yeah, it's really fun. I'm excited.

Speaker 0: Me too, me too. So let's talk about what this means. So the founders of this batch are going to have an in-person retreat in Sonoma to kick the batch off. They're gonna be able to go to weekly meetups in San Francisco. We're actually going to help organize weekly meetups in other cities around the world.

We built some software that are going to help founders meet each other and have one-on-one coffees, founders in the same city. And then we're gonna have a huge end of batch celebration after demo day in San Francisco with all the batch and the alumni. Needless to say, the program is still gonna be friendly to founders participating remotely. So the batch talks, office hours, things like that will still be online. And we still have founders from all over the world participating.

But I have to say, founders I've talked to in every country have been excited to come here to meet us, to meet their batch mates, to get out in front of Zoom and get off these cameras for a little while. So I'm really, really excited.

Speaker 1: Yeah, we kind of had a dry run a little bit last batch where there were a lot of these in-person meetups. And I went to a few, I know you did too. And the energy was great. And so yeah, now is the time

Speaker 0: to make this move. The idea that we get to re-announce something that was so core to YC is actually quite fun. What other trends are you seeing for the summer 22 batch?

Speaker 1: Yeah, I mean, let's see, to go through some of the stuff I've noticed. So for 1, more applications. I think that's always a trend, but there's definitely more applications. And you know, I think the new YCDL doesn't hurt on that 1. And so, yeah, more applications, more applications to read.

And the energy is feeling good, man. How about you? What are you seeing in your group?

Speaker 0: Same thing. I'm seeing teams be slightly more technical, which is exciting. I mean, when you work with strong technical teams, we talk about taking punches. Strong technical teams punch back. And so to me, like that's always fun.

It's always much more enjoyable work with strong technical teams. But, you know, over the last, you know, let's say 3, 4 months, what are you seeing overall in our world?

Speaker 1: I think that people that want to do a startup because they're excited about building something and solving stuff for users, those people are still applying. If anything, those folks that aren't making fear-based decisions are more excited to apply to YC and do this almost because it's more rebellious or anti-something to do a startup when it's less cool to do it. And this makes sense. Again, if you, if you actually look at the YC data, some of the best companies we've ever funded happened when either there was a full downturn or at least a blip, I think we can call it a blip. Like some of what happened in 2018.

But look at when Stripe was founded, look at when Airbnb was founded, look at when Dropbox was founded, right?

Speaker 0: Yeah, it's a weird trend because I agree with you. It's both a little bit like, I wanna go against the flow, there's that set of founders, but there's also the set of founders who are just strategic, who are just like, hey, look, in the middle of the hype cycle, hiring is harder, getting access to customers is harder. Like 17 of your competitors are going to all get funded. Like, you know, It's weird because on the surface, the hype cycle looks good, but when you actually get into the dirt, the hype cycle hurts just as much as it helps. And so I'm starting talking to founders in this batch who are like, yeah, no, this is actually like, they're not wishing for a downturn, but they're like, this is the time when it's strategic to get in the game.

Speaker 1: Yeah, make hay while the sun shines, right? This is where, oh, cool, you know, the price of Facebook ads is dropping. Oh, cool, like all These factors are changing. And so if you're like well-positioned, this is when you go on offense. Yes.

You're not like defensively, oh, I'm gonna hide. There's a lot of folks that we talk to that are like extremely ready to go on offense.

Speaker 0: Yes, yes, they've been waiting for this moment. Now we're also seeing a lot more interest in San Francisco and like, I don't know, like that's a dirty word. I'm not sure if I'm allowed to say the term San Francisco because we all know the tech world doesn't exist here anymore, right?

Speaker 1: Yeah, well, it's funny. There was so much content marketing trying to FOMO everyone, that everyone was moving into whatever, insert city name, whatever the city was, this is the next capital. And then there was a lot less content marketing of all the people that moved back. And so again, I don't know who you're talking to, but a lot of the folks I've talked to, quiet, you know, that were loudly talking about moving away to whatever city name, you know, they're much more quiet on the move back. Yeah, I'm not seeing as many, I'm not seeing as much of that.

But yeah, I think a lot of folks are moving back right now. New York too. It just seems like people are going back to the big centers because they're getting bored and lonely and feel kind of over it. Again, this is what I'm learning in Office Hours, man, is that people, they wanna be where the action is. You

Speaker 0: know, I think you're saying it the right way. I think the founders I talked to, they don't wanna build a startup ecosystem, they want to be a part of a startup ecosystem. And it's been interesting, because we saw it, you know, first in the end of batch survey when we asked people about, oh, as we add more in-person components, and it was like almost unanimous, the founders in the previous batch were like, if you had told us something was happening in the Bay Area, we would have moved, you know, and like that was a response we didn't necessarily expect.

Speaker 1: It's almost like you and I were convinced that that wouldn't be the case. Like, I don't know how to explain it. Like the content marketing worked on me too a little bit. Yeah, yeah. But it's like, it's not being borne out in the data that we have about, you get what I'm saying?

I kind of bought into the content marketing too, but we'll see. I don't know.

Speaker 0: I think the other thing that I'm seeing, and it's interesting because I've got a brother who's this age, a recent college grad. I think what's so hard for a lot of people to see is that if you're a recent college grad, you don't want to stay in the city you went to school in. You might be living with your parents. In comparison, moving to the Bay Area is way better of an option than kind of your current setup over the last couple of years. And so I think that a lot of that content marketing is unfortunately written by like people our age, people with kids, people living in San Francisco for like the last 2 years who were generally pissy about COVID.

And it was like less responding to someone who might've spent a year and a half remote doing college or living in some small college town locked down. And is like, I wanna get out of this. You know, like that kind of person is, San Francisco looks like a beacon.

Speaker 1: I think you want to be where the action is, is I think how my summary is. Versus feeling like you're in a, not where the action is.

Speaker 0: So another thing that happened recently is we sent a letter to YC Founders about the economic downturn, which happened to maybe get a little bit of exposure to the general public. I'm not sure how that happened. But it was interesting because I've been really impressed with how the YC founders have responded. What have you seen?

Speaker 1: I think that if you're smart, you know how to look at things like that as well as just general press or advice and apply it to your specific situation correctly. If you're a two-person startup with no burn, what's happening in the late-stage fundraising environment in IPOs, if that's what you're worried about, man, you've got bigger problems, okay? And so I think if you were able to say, well, what is my actual situation? Am I default alive? How much cash do I have?

What's my runway? And Then make the right moves. Because again, for some folks, the actual move is to go on offense. Right? Like we said a moment ago.

Where they're like, okay, I see. So this is the score, got it. Time to go hard against my competitors who have higher burn. You know, like this is a great time if you're the underdog and your large competitor is in trouble. Right?

And so I think that smart founders know what applies to them and what doesn't versus overly freaking out about things that have nothing to do with them. You know, what do you think?

Speaker 0: You often talk about this, and it's something that I think is becoming part of the culture of YC, where we wanna talk up to our founders versus down to our founders. Like, we wanna talk to the smartest kid in the class, not the dumbest kid in the class. And I think sometimes in the general public, that's not well understood. But I think within the YC community, it really is. You know, feedback that we got from alums was universally, this caused me to take a sober look at my situation.

And if my situation was good, I'm staying on plan. If my situation wasn't, I'm making changes. And just to your point, it wasn't I'm freaking out. It was like, okay, I'm gonna take a second and do a sober analysis of my company. And I think what's unfortunate is that they had just gone through this 2 year cycle where investors were basically screaming at them to burn and raise, because investors were getting markups and they were raising new funds.

And so I think that in many ways, this letter gave them a lot of people the opportunity to say, okay, wait a second, like is that strategy actually good for my business? And it's obviously good for my investors business. You know, getting markups is obviously part of their business model, but is that strategy good for my business? So that's been really fun to see. It's been fun to see the founders taking it in the right way.

Probably 1 of the last big trends is this new Standard Deal, right? That was big news over the past 4 months. And it's interesting because I think that in some ways it was conceived of competitively. People were looking at the YC Standard Deal being like, oh, like YC is to compete, there's so many new seed funds out there. And I think what's interesting is if you would kind of take it inside baseball for a second, that's really not the reason we did it at all.

Take us inside baseball a little bit, Dalton. What was the strategy behind it?

Speaker 1: Yeah, I mean, the strategy was it's good for companies to get fully funded the moment we accept them. And frankly, we saw some stuff that looked a little toppy, to use the

Speaker 0: Wall Street Bets terminology. You're speaking in code. Be literal here. What did we see?

Speaker 1: It looks like we're not sure that things were sustainable that everything would keep going up forever. How about that? Stocks may not only go up. And so It seemed prudent to give the companies more money so that in the event of a market change, we were confident that everyone would be fully funded. Again, for context, I think people forget this because of all the crazy seed round warped perceptions.

How much money did Airbnb and Dropbox and all those folks raise back in the day? How much money did Airbnb raise again?

Speaker 0: Under a million. Under a million. These seed rounds are under a million. And diluting over 20%, over 25%.

Speaker 1: So we actually know that half a million dollars is slash was enough money to build like 1 of the most successful companies ever. And it made a ton of sense to have this budget, to raise this money. We could fund a lot of companies. It's all raised. We have it dry powder.

So that no matter what happens, if you get into YC, you're good.

Speaker 0: There's this saying that I love, the best time to fix the roof is when the sun is shining. And, you know, I look at our opportunity to create this new standard deal for YC founders and the fact that we have budget to fund over 1400 companies with this standard deal. And I think to myself, like, you know, I'm so happy we did that when we could, because now we're gonna be able to help so many teams that otherwise might not be able to do startups, might not be able to raise money. So.

Speaker 1: And not be sure, oh, I don't know if I wanna apply to YC, I don't know if I wanna start a company, because I'm afraid, I've read TechCrunch articles, the funding environment is rough. There's all these like fears out there. Well, it's like, well, yeah, if you get into YC, you get half a million dollars. And like the day we fund you, it's funny, like people, they almost, sometimes people don't believe us. They're like, wait, this is contingent on something, right?

It's like, no, we give you the money up front.

Speaker 0: Yeah. No, but like, don't other accelerators, they have something where they take it back if you don't do it's like, no, like, if you don't kill anyone, you don't violate our ethics thing. This is, this is the deal. I think what was also interesting was to see how YC founders used the new standard deal in the last batch when they were fundraising. You know, historically, seed funding could dilute companies 25, 30, even 35%.

I would say in more recent years that number was around 15 to 20 percent. But we really saw a lot of founders able to get the money they need, raise their seed round with 10 percent, some even a little less, dilution. Which was like huge. I mean We all know those earlier rounds are where most of the dilution in the company happens. So that was awesome to see.

The other thing, and I know you saw this in your group too, is just founders going into fundraising with confidence. You know, we talk about this all the time. We tell the founders be confident, but it's hard to be confident when you only have 6 months or 3 months of runway when you go into fundraising. It's a lot easier to be confident when you come in with half a million bucks. What did you see in your group?

Speaker 1: Yeah, I think the best founders were just very logical and non-emotional in the way they handle this. It's business, right? The best way, imagine any financial transaction, you want to buy a house, You want to buy a car, you name it. The more that you can be just not manipulated into being emotional or to be FOMO, like there's all these things. If you could just be like, hey, I want to buy a car.

This is my budget. This is what I want to buy. Okay, let's work it out. All right, I bought the car. That's how you want to approach any kind of financial business relationship, right?

Is just to be non-emotional. And so that's having this extra money helps people not be quite as susceptible to being told to be afraid, basically, right?

Speaker 0: Yes, Being told to be afraid. And it's such a weird thing to watch a founder simultaneously be almost negged by an investor and be told to raise more money from that investor. Right. Where the investor is like, your plan is never going to work. You're not raising enough money.

You're gonna die, or da-da-da-da-da. If you take my money, then it'll all work out. And it's like, I've been so happy to see why C Founders is able to kind of push back against all of that, and really be sober, Right? Like, just be sober in your planning and things work out better.

Speaker 1: It's just, it's funny, because like we always are optimizing for, you know, we're former founders. I think it's like, what would have helped me when I was a founder? And it's just funny how like doing that really seems to annoy investors that we're like, again, we're like giving away, we're like on the wrong team a lot. They seem really mad at us. We're on the

Speaker 0: wrong team, Dalton.

Speaker 1: Like I thought, like, isn't that weird, man? Like why?

Speaker 0: We have a grand nefarious strategy of giving founders what we wish we had when we were founders. I mean, isn't that like so funny because it's kind of 1 of the core guiding principles of YC when we think of what we're going to do.

Speaker 1: Yeah, it's like what would I have wanted? Yeah, like that's certainly how I think about this.

Speaker 0: Yes. And the opposite too, like what would I have thought of as bullshit? Like how do we not do the stuff that I would have just like been like, that's bullshit, who cares?

Speaker 1: I mean, it's hard to do in practice. It's just At the end of the day, more leverage for YC founders, good. More options for YC founders, good. That's the game.

Speaker 0: Obviously so. Anything more on the standard deal?

Speaker 1: So far so good. Again, like the folks that are in my group this batch, man, they're feeling good.

Speaker 0: They're feeling very good. Yeah. And probably the last trend, and maybe 1 of the most heartwarming trends, is how many alumni reach out to us and say they're watching these videos? Like, how much has that come up for you in the last 6 months since we got this thing rolling?

Speaker 1: A lot. I think when we first started recording these, my perception, I wasn't really sure who the audience was and maybe I'm still not sure, but it certainly would appear that a lot of YC alums are watching these, which is awesome that we have this direct line for people to hear from you and I personally about what's going on with YC. I mean, it seems better than other forms of communication, right?

Speaker 0: It was interesting because we put out a video. It was interesting because we put out a public video about making sure that you are prepared for down economic times before we even sent a letter. And 1 of the reasons we were inspired to send a letter was the number of alums who had watched that video and reached out and said, thank you for doing this. We're rethinking our plan. And so I just think it's exciting to see that the YC alumni are watching these videos alongside prospective founders.

It's awesome to see. All right, well I think that's it. So in closing, we are really looking forward to meeting the next batch which is going to happen very soon, mid-August. I'm sorry, mid-June. And then we're also ridiculously excited to meet all the founders that we've funded over the past years.

We're gonna do a massive alumni event in San Francisco in the fall. And so for all the people we haven't seen in person yet, we'll see you soon. Dalton, Great to see you. Sounds good. Bye.

Speaker 1: Transcribed by https://otter.ai

See all Y Combinator transcripts on Youtube

Y Combinator Is Back In Person