Is Y Combinator worth it?
What a question, right? I always get asked, “is Y Combinator worth it?” and I asked it myself over and over and over again. Finally, I’ve arrived at a conclusion that I hope will help other founders who go through the same struggle we did. Let me breakdown the predicament we faced at Medinas Health and quickly take you through our thought process and hopefully help you make your own call when you inevitably ask yourself the same question.
Our company is Medinas Health, an S18 company headquartered in the SF bay area, and the team met whilst working at a YC company in San Francisco. We had raised $1M+ before YC, we had started making money, we felt like we had a good sense of the direction we were heading in, we had done a lot of groundwork for our next round of financing, and we were starting to focus on sales and growth.
We had won a few big competitions and awards, we had some pretty big logo customers we were talking to and felt really good about where we were headed, and thought we had it all planned out.
Then the time came to apply for S18.
Well, with the deadline fast approaching, we ended up chatting with a few partners who came to Berkeley to talk to UC Berkeley startups and decided to apply and see what happened.
As luck would have it, we got in.
Oh no, is this worth 7 percent!?
When it came down to it, from a pure financing perspective, YC’s offer would be a down round relative to the round of financing we had completed shortly before and the inevitable question our friends asked was, “is Y Combinator worth it? Especially if you’ve already raised?” Well, we weren’t the only ones who had raised money before YC, but nonetheless we started an ongoing refrain of, “is Y Combinator worth it?,” “is YC worth 7%?” and then we started up with the “we have to make sure we get 7% worth of value if we’re going to do this” and my co-founders and I were frankly unsure of what decision we should make. The biggest issue I saw was that it changed our fundraising plans and timelines. To be honest, the YC question threw our otherwise healthy, focused and together team into a bit of an existential spiral.
So here’s what we did. We talked to probably 10+ YC founders from all different batches. I modeled out multiple future fundraising scenarios, including down rounds, flat rounds, multiple exit scenarios and tried to get a sense of the monetary value of what we would be giving up. We spoke with our investors, including our current and prospective investors and still couldn’t get enough hard data to make a clear decision. It was pretty maddening. Finally we had a chat with Sam Altman who was the one who finally made it click for us.
The “oh” moment.
YC’s deal is aggressive, and if you sit down and focus on the deal and the terms you’re going to give yourself a headache because there’s no right or wrong answer. It’s not about the terms or the deal. There are so many unknowns that you’re trying to gamble against that the exercises I did above, whilst useful to some degree, are honestly meaningless.
The secret to YC is that you get out of YC what you put into it. Let me repeat that.
You get out of YC what you put into it.
If you go into YC focused on getting your comeuppance, you’re going to fail at getting the best experience you can.. There is no magic bullet or well-kept secret on how to be a successful founder or build a giant company. But what you do have is a massive network and giant compendium of knowledge gathered over years and years of experience to help you avoid the known unknowns, and fight your way through the storms. You’ll build critical business relationships, you’ll have direct access to people who have been there and got the t-shirt years before you, and who can help you win the game. You will have a lifetime membership to the cult of YC which is an incredibly valuable and rewarding community of top shelf people.
So, is Y Combinator worth it? Well, it isn’t perfect. There are number of things I could point to that aren’t perfect about YC, but something you need to keep in mind is that YC is run by people. People are not perfect. Your startup isn’t perfect. But they’re doing their best to help you be successful, they’re constantly asking for feedback and iterating and improving and there’s a small army of people working at YC who have a literal vested interested in seeing you succeed. Can you build a successful company without YC? Absolutely. Should you do it with YC? In my opinion, I think that’s up to you. If the positives I listed above sound good, then I think you should.
Now that it’s all over, would we make the same decision?
Aka, is Y Combinator worth it? Yes.
What value did we get out of it? An amazing network, intelligent minds to help us solve problems, a great pressure cooker to push towards a goal, a community who are at a similar stage in their company’s life, and an incredible demo day which helped connect us with some amazing investors we’re excited to go to the distance with. How’s that for a long sentence?
Stop thinking about YC in terms of “is it worth it?.” It can be worth it if you make it that way. So if you decide to do it as we did, embrace YC to its fullest, and go out there and grow grow grow and put a lot into it so you can get a lot out of it.
Medinas Health helps hospitals resell their excess equipment and optimize clinical asset management. We’re always looking to connect with amazing founders, shoot us a note at firstname.lastname@example.org
If you found this article useful, I’d appreciate feedback below!