With the advancement of technology and human inquisition, we are getting more prone to finding newer methods of finding financial stability and success. Entrepreneurship is the most dynamic and effective form to make stable money and comes with the benefit of room for innovation and freedom. As startups can significantly create new jobs, they do effectively boost the economy. Thus started the era of creating new jobs instead of racing behind the existing ones.
In such a scenario, seed funding and incubation become very crucial for startups to thrive. Seed funding is the first round of investment where an intermediate amount is provided to a startup in a quite formal procedure while Incubation is the process of providing a small amount of money and focusing more on physical space, connecting to mentors, and classroom activities.
What is Y Combinator and how is it different from others in the race?
Y Combinator is an American seed money startup accelerator that started in March 2005. They have launched over 2000 companies to date, the most prominent ones being Stripe, Airbnb, Dropbox, and so on. The net value of the top YC companies was estimated to be over the US $155 million in 2019.
YC was founded by Paul Graham along with his wife Jessica Livingstone, Trevor Blackwell, and Robert Morris with just $200k. It was started when the founder noted that there were no specific standard seed funding companies in existence and the whole funding process was very random. Today they work with the startups intensively for three months and help them improve their key and get in the best possible structure before approaching the investors. They also invest in small amounts in the companies for small stakes and help the founders in dealing with the investors and acquirers. Therefore YC acts as both a seed funding company and an incubator; this is where their essence lies. Thus YC is a very different and equally significant company.
How YC works?
They help the startups get through the first phase where they work their potential into kinetic progress and build something concrete to attract investors. Twice a year, they fund a small amount of money in a large number of startups. They host a weekly talk featuring some experts to speak on the aspects of a startup. A Demo day is also organized to provide the founders with an opportunity to showcase their products and services to a sieved swarm of investors and press. The concept of funding in batches also enables founders to help each other out. It also yields in a huge alumni network and strong ethos making it easier to find a Good Samaritan for newbies.
Why is YC eager to associate with Indian startups?
YC has funded more than 100 India based startups. Companies like Meesho, Razorpay, Cleartax, Groww, and many more companies were backed by YC at their earliest stages. Their interest in India lies due to the immense potential the country’s economy could reach by 2030. Indian startups shall play a major role in accelerating the country’s growth and development. Earlier this year, 24 Indian startups were selected by YC for funding under their Summer 2020 batch. More than 20 unicorn startups were already funded by YC in the last few years. YC’s involvement with India will prove to be a great opportunity for Indian entrepreneurs as the company has decided to increase the winter batch from 24 to 28.
The present scenario of Indian startup ecosystem
The biggest disadvantage of the Indian Startup scenario is probably the fact that it is constricted by local boundaries or at most programmed for a national market. Naturally, the frog in the well won’t have any idea about the vast possibilities in the ocean. The Indian startup ecosystem needs to develop its products for a global market to receive greater exposure and flourish full-fledged. Also, criticism plays an important part in any venture. Success is achieved by building more on critical reviews and faults than on sweet compliments. The lack of brutally honest opinions often deters the growth of the enterprise by keeping them under the cloud, thereby letting them remain oblivious to their shortcomings. Talking about other problems, India has a very low tolerance for the founders’ missteps. Failures are taken as the end of the road instead of just another bump. While in the West access to capital is quite procurable and a comparatively easy process, in India, financial help is only rendered to a proven business model or product. Albeit, there is much less space for taking risks.
Where does the scope of improvement lie?
Indian startups also need to utilize the internet boom and liberalization to its full extent. Innovation and freedom of implementing new ideas are the driving forces behind startup culture. The scope of innovation in itself is the greatest asset for starting up because it has perennial space for development. Thus the generation of new ideas to meet the latest demands of the global market accompanied by the ease of procuring funds and acceptance to failure sounds more like the mantra of success!
How can YC help Indian startup?
The present need for Indian startups is the easy availability of funds based on strong concepts and not necessarily a successful business model. At YC funds are provided looking at the business idea rather than a full-fledged business plan. Many potential ideas are nipped in the bud due to lack of funds, encouragement, and guidance. Thus, the company’s collaboration can kickstart a change in the thought process of the Indian market. With the new generation heading towards a much more “employer” based career, it is of utmost importance to create a startup-friendly atmosphere for the entrepreneurs which can be achieved by collaborations with companies like Y Combinator.
YC's international presence and tour to the IITs
The company visits several countries across the globe twice a year. Around 40% of the companies they fund are from outside the USA. They planned a virtual tour in Latin America, Nigeria, the Netherlands, Singapore, Thailand, Turkey, and India this fall. The India tour will mainly have their focus looming around the six old IITs. They will conduct online talks in Roorkee, Kharagpur, Madras, Kanpur, Delhi, and Bombay which will witness YC partners and alumni founders from these schools. The talks will mainly consist of myths around start-ups, advantages of getting associated with YC, inspiring anecdotes by the founders about their journey, fundraising, and their stint at YC. To make it more interactive, students shall get the opportunity to ask questions to the founders who are alumni of their school and shall therefore have a role model to look up to!