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In some ways, Y Combinator’s biennial Demo Day is somewhat predictable: There will be Stanford dropouts, last-minute deals and, as always, the promise of short-term returns. term. we even made a bingo board about it.
But one thing I could never have predicted ahead of time was the exact priorities of the players during the season. Y Combinator is in fact backing people, not ideas, so its Demo Day technically reveals two things: who the accelerator bets on, and what they decide to prioritize. This year is different for a multitude of reasons. First, YC Summer 2022 is the second batch to receive checks for $500,000 instead of $125,000, as part of the accelerator’s expanded check size. Second, the batch is smaller than usual (see previous versions of this column here and here; it’s a completely different tone) – the narrowing of focus that the accelerator says is due to recession. And finally, that was the first batch we saw the dichotomy; more than 60% of the mass founders were in the Bay Area during the three months of the accelerator, while the others were still scattered around the world.
All that tension is great for story ideas. So this week as we cover the latest release of YC, we’re giving readers a better understanding of the issues startups are prioritizing during the downturn and shake-up. of YC has affected the company’s concentration in certain sectors and geographies relative to others.
I’m proud of the way we do it despite all the iPhone news. We wrote about how YC’s fintech founders get back to neobank ship and Cryptocurrencies continue to be a bullish area. we Dig deep into outstanding artificial intelligence and knockout creative economy. And before I start sounding like a Dr. Seuss special, we took a look at a geographic focus from the macro scale and a retreat on a micro-scale.
Keeping this in mind, as is tradition, I want to leave you with a few things I learned after listening to hundreds of pitches. Here’s what Combinator’s 277 pitches taught me, and you probably now, about startups:
- Idea, then people or people then ideas: There are two groups of people investing in startups, checkers investing in disruptive ideas and then different groups of people trying to make those same ideas a reality; and check writers, who invest in people and then support those people in whatever disruptive ideas they come up with. Y Combinator asserts that it is more of the latter than the former. But, the data says otherwise. Last time, 29% were accepted with just one idea; This time, 43% were accepted with just one idea. Which means that over time, YC has become more and more comfortable backing founders with ideas; not necessarily less. Something to think about when looking at trends and how one of the most famous accelerators thinks about breakdowns.
- It’s a fintech accelerator, first: Oops, my bias is showing. YC increasingly feels more like a fintech and crypto accelerator than a biotech and consumer accelerator; you can tell based on the breakdown of startups in batch, even from Demo Day format. It’s hard to tell a biotech or climate story with a one-minute slide when this format really helps a startup trying to make financial services easier.
- Photos of the moon that won’t go anywhere: One theory I went into this batch was that larger tests, even in recessions, would lead to a larger swing in the batch. We were not disappointed. Moonshots includes fake fish, alternative investments in athletes and another ambitious take on the world of DTC healthcare.
In this week’s announcement, we’re taking a look at some startup mergers, Kim Kardashian, and the latest on layoffs. Be sure to read the full article as I received a TC+ discount code, especially for Startups Weekly readers, in the post.
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Start a business, get the scoop
We’re not talking about liquidity here, and I’m partly to blame for the fact that the M&A market has felt rather dry over the past few months. Thankfully, we have some notes to cover this week.
Amazon buys Cloosertermans, a mechatronics specialist will help it strengthen its robotic arm. TC’s Ingrid Lunden reports that the startup has “built in technology to move and stack heavy palettes and totes, as well as robotic technology used to package products to customer orders row”. The attention from Amazon isn’t new: Amazon has been a Cloostermans customer since 2019, but the acquisition makes things a lot more official.
There’s also an acquisition from Instacart, which is busy ahead of its upcoming public launch. Grocery delivery company announces that it has acquired Rosie. It will expand the company’s footprint towards local and independent retailers.
And, over the weekend, we have online grocery company Misfits Market announcing that it will be buying Imperfect Foods again. I love it when Misfits and Imperfects come together.
Here’s why it’s important: More consolidation gives us some much-needed signals on how the exit environment is performing these days. For early-stage startups, especially those struggling to raise one more round, the future can look like it’s going to be animal feed (and that’s not bad news).
VCs work hard, but Kim Kardashian works harder
Kim Kardashian announced this week that she’s breaking into the world of private equity with SKKY Partner. Her company, made in partnership with Jay Sammons, Carlyle’s former partner, has yet to raise its first fund but plans to make its first investment later this year.
Here’s what’s important: It’s the financialization of the trend-setters, as we discussed about Equity. We’ve seen influencers land partnerships, start companies, score equity in startups, but PE will be on another level – even for the Kardashians.
I’m testing a new section in Startups Weekly, where each week we follow an old story or trend to see what has changed since our first glance. We haven’t talked about layoffs a bit around here, so no further advice…
Here’s what’s new: Patreon has confirmed that it has fired five employees from its security team. It will rely on external organizations to develop security capabilities. There is also some tension leaking from Aurora while Nigerian digital bank Kuda is the latest African startup to lay off staff.
Wait for it. See it? Yes, I’m happy too. And while we’re on the topic of home management, some other notes:
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Can you believe it’s technically a short week? Chat Monday.