YC W24 Demo Day Recap

Meanwhile, Instagram big-dogged YouTube, Jony Ive and Sam Altman are fundraising, and Google is thinking about buying HubSpot

I simply cannot handle redeye flights the way I used to. Back in the saddle though having fully digested my YC week in SF and excited to share some takeaways. Below you’ll find the typical headline round up and I’ll share some notes on YC at the end. I’m also live streaming a quick presentation that covers the takeaways right about now (3pm EST). Click here to tune in and ask questions through Twitter/Linkedin.

And of course, don’t forget the Sandhill Demo Day this Thursday. RSVP here!

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Instagram makes more money from ads than YouTube does, and it has for years

“The gap is also there even if you look further back. In 2020 and 2019, Meta lists Instagram’s ad revenue as $22 and $17.9 billion, respectively, while YouTube’s ad revenue is listed in its annual report (PDF) as $19.7 and $15.1 billion for the same years.”

Jony Ive and OpenAI's Sam Altman Seeking Funding for Personal AI Device

News of a possible partnership between Ive and Altman first surfaced last fall, but talks were in the early stages and nothing was official then. Ive and Altman's unnamed startup is now sourcing funds from major venture capitalists, with Ive aiming to raise up to $1 billion in funding.”

Exclusive: Google parent Alphabet weighs offer for HubSpot

“A deal for HubSpot would expand Google's offerings in the booming market for customer relationship management (CRM) software, enabling it to tap a wider base of enterprise customers who spend on marketing and advertising.”

Hot Links

RIGHT NOW: YC W24 Recap & Reactions

Join us live today at 3pm EST (now) to hear from Adam as he walks through his YC experience and presents some key takeaways. What he saw. What he liked. And what to expect in the year to come.

Unfamiliar with Y Combinator? Check out their Startup Directory here and their Launch YC platform here to check out what their ecosystem is building.

THURSDAY: Demo Day Is Back With SeedChecks

Demo Day is back--and this time we're partnering with SeedChecks to make it even bigger! Click here to RSVP to the live event.

SeedChecks was built by our friend Julian Shapiro as a one stop shop for founders to get in front of some of the biggest names in venture. It’s an impressive group and we’re excited to bring our Live Demo Day format to their ecosystem. Here’s how it works:

When you submit two things happen:

  • First, you’ll have your deck reviewed by the SeedChecks team as well as their incredible group of investors. The group of over 15 active investors write checks between $300k and $3M.

  • Second, if it’s a fit for Demo Day, we will reach out directly to invite you to present live.

We will select 4 founders to present live in front of the combined audiences of Sandhill and SeedChecks!

​Finally, tune in live on Thursday, April 11th at 3PM ET to watch these four exciting founders present what they're building to a panel of experienced investors and seasoned operators. Our amazing panelists:

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Disclaimer: Accredited investors only. Private markets investments are risky, speculative, and potentially illiquid.

I have invested in over 100 YC companies and all I got was this lousy badge
(jk I got equity too and some new friends)

Letters From The Editor

Misc. (short for miscellaneous)

YC W24 Demo Day Recap

I’m actually talking through this live right now (3pm to 330ish April 9th) if it’s of interest. Click here to tune in and ask questions through Twitter/Linkedin!

If you’re not familiar with Y Combinator you can read more about it on their website here and you can browse the batch in the directory here. They also maintain a Launch YC platform that’s home to recent announcements from YC startups you can see here.

Key points in the order they came to me and some notes on each:

SF is not dead.

I haven’t travelled there in a while and see the same news as everybody else, which would make you wonder if you should travel there at all. There are homeless people, but it wasn’t noticeably bad. They still close bars/restaurants too early, but maybe that’s a good thing for tech nerds (founders + investors). Tech is THE THING to do in SF. It’s everywhere. It’s what people talk about.

YC talent density is unmatched.

They hosted a happy hour from 5pm to 8pm last Wednesday with all of the batch founders and an invite only investor group. I thought I’d be there for a couple hours and run out of steam. I was there until 9pm and it flew by. Smart people building interesting things. The energy was palpable.

YC investor competition is also unmatched.

I have actually invested more in YC founders than in any other discernible sub category of startups so it took me a while to really have context on this, but it’s crazy how competitive these rounds are. It’s great for founders (in most cases). It’s not great for investors (unless you’re a known Tier-1 player). Timelines are very short. It’s easy to miss allocations simply due to response timelines. Being very broad and fast or being very targeted and value add are the only ways to increase close rate. Still hard to argue for not being involved. It’s just tough to get to know founders on that timeline. This is not by accident and it purposefully shifts the power balance to founders.

As an investor, SF is annoying. 

I’ve thought about this a lot. Should I live in SF? It’s the heartbeat of tech. It’s where the action is. As a founder, I think that’s there’s a really strong argument for being there. Especially in AI. The serendipity can actually move the needle. As an investor, I think it makes it really hard to be objective or thoughtful. I don’t think hanging out with lots of VCs is good for VC returns. The best VCs don’t really talk to many other VCs (have heard this from primary sources multiple times). They spend their time by themselves, maybe a small team, with founders, and with non-tech people. Well doesn’t that mean you should live in SF in order to be close to founders? Founders are busy building their companies. Pop every once in a while to say hi in person. I just don’t know how it’s possible to form personal opinions when you’re constantly engaged in some sort of committee-type conversation on the subject. It’d be like listening to podcasts 24/7. When do you have time alone in your brain? Obviously this is a personal opinion and not based in data. Maybe I’m just making myself feel better about not being there.

YC valuations remain steady.

Over the past two years - which I admit is not very long - I haven’t seen YC valuations change at all. Fresh pivots raise at $15M post. Strong companies raise at $20M post. Strong companies that raise $2M on $20M-post close that first SAFE quickly and stack another $1M on $30M-post on after that. Garry Tan puts out a line that “85% of rounds are open after demo day” to push against the idea that all the “good” companies are closed by demo day. I would say that all the “good” companies have closed their first tranche by demo day, but they open up more at a higher valuation. This is a good strategy for YC and for founders. This is a tough pill to swallow for investors. More from a pride perspective than a math perspective. It just hurst to pay more than someone else did last week. If you’re investing in YC as a non Tier-1 investor, you will get your ego bruised. I also put “good” in quotes because no one actually knows who will win and therefore no one actually knows what' “good” is. Venture is hard.

YC valuations prove that Seed is different than Venture at large.

Pre-seed and Seed stage valuations just don’t really fluctuate as much. Smart founders raise at similar levels no matter what the economic conditions look like at the time of raising because they don’t know what things will look like when they go out for their Series A. If you raise a really aggressive Seed you need the market to be really hot when you raise your Series A to make the numbers work. YC coaches founders to be smart about their raise rather than to just pump the number as high as possible. Better investors also get better valuations. We’ve seen this play out publicly with founders like Dan Siroker from Rewind AI, but the general point is that Seed stage investments aren’t priced in your typical supply/demand framework. Different investors are able to buy equity at different prices. This goes away in the growth stages. Seed (and pre-seed) investing is special for that reason and I don’t think it will change.

YC is leaning into IRL.

The event really was great. Tons of energy. Awesome way to meet the batch. The only complaint would be that it happens too late. Rounds are mostly closed or very close to closing. This creates a weird anxiety in conversations around moving quickly rather than getting to know people. YC founders are generally coached to not start having investor conversations until ~1 month before demo day. I heard a rumor from a reputable source that the happy hour will end up being a month before demo day rather than the night after day 1. I think this will be even better. I just hope it doesn’t mess with fun August vacation plans (the S24 demo day will be 9/25 and 9/26).

YC leaning into IRL is good for SF.

Every founder in the batch that we talked to was there IRL for the batch. Pretty sure it was required. Most of the founders I talked to were staying in SF after the batch ends. The ones that I talked to who weren’t moving to SF yet were very heavily considering it. There’s a momentum there that seems to be building. Founders want to be around other founders. Talent moves to where founders are. Founders move to where the talent is. “We love flywheels.” - VC

Garry Tan is doing a good job.

This seems obvious, but I think that’s part of why it’s worth mentioning. YC dominance is not a given. There is a lot of money to be made unseating them, which means a lot of people have tried and will continue to try. Garry took the reigns in January of 2023. Here a few clear directions he is going:

  1. Leaning into media. He understands the importance of education in building brand/staying top of mind with founders. They were good at content before, but Garry has really supercharged it. It’s working.

  2. Leaning into SF. IRL is back and Garry is bringing SF back to its former glory from a founder perspective. I mentioned the flywheel that’s happening above.

  3. Leaning into Partners. The group partners that actually work with founders are at the heart of YC. Garry cut the growth fund and is going deeper with the Partners. This seems more scalable for YC. The more great Partners Garry brings in the more founders YC can support.

Investing is hard.

Getting invited to the YC investor event was a big thing for me as someone relatively new to investing who first applied to YC as a founder in 2018. My first reaction at getting invited was “hell yes I made it” - but after a brief moment of excitement I quickly realized that it doesn’t make investing any easier. Becoming an “insider” comes with it’s own set of challenges that can actually be more detrimental than the friction related to investing as an “outsider” in VC. The main point here being that if you think the same way everyone else does you’re not going to make money in VC. Thinking the same way as everyone else becomes easier when everyone around you seems smart and in the know.

Alright that’s it. I was going to try to wrap this up in some clean way, but I don’t think you or I have the stamina for it. So I’ll just end here :)

Talk soon,

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