Y Creator, Y Competition – TechCrunch

Welcome to Startups Weekly, a new first-person interpretation of this week’s startup news and trends. To receive it in your inbox, sign up here.

YC had its biggest news in years this week: Garry Tan will be the new president and CEO of the organization, starting January 2023. Tan co-founded and helped scale Initialized Capital to a venture capital firm that is now manages over $ 3.2 billion in assets. All along, he has always had roots in YC, both as a former partner of the organization.

One detail that didn’t make my story this week is how Tan is bringing a content creator vibe back to @ycombinator’s leadership ranks. This is happening to Geoff Ralston, who wasn’t too public about his work on the accelerator. Tan, however, has amassed over 220,000 YouTube subscribers for technical videos of him. Topics on Tan’s YouTube channel range from how to drive like a champion to how development teams can build like Google and, yes, how to apply for YC in 2022. Remember the essays by YC co-founder Paul Graham, many of them inspired entrepreneurs to get started with startups.

YC’s choice to put a creator at the helm is in line with the focus on the product over the past year. In June, the accelerator announced Launch YC, a platform where people can sort accelerator startups by industry, batch, and launch date to discover new products. Launch YC invites users to vote for newly launched startups “to help them climb the leaderboard, try product demos, and get to know the founding team.”

As standing out within YC has become more difficult and given the importance of distribution for early stage startups, YC offers a way for startups to make a little more noise that could make the implicit cost of its program more attractive. . Tan continues the same focus, both as a well-known personality within tech and as a creator who has spent years building a startup-focused brand at an early stage.

Aside from the news about the creators, the jumble of Y Combinator executives raises another question: competition. Tan did not say how his new role at Y Combinator and his future role at Initialized, which is a risk advisor, will overlap with the question of competitive or complementary dynamics. She offered Strictly VC a similar sentiment:

When I left YC, I was always careful never to ask YC partners “Who was hot?” Initialized it did its job. This doesn’t change with me inside. Initialized was built to be the ideal company that founders would choose because of the ethics, approach to founders (soft advice, not your boss) and what makes it even more unique is the great emphasis on the team and the services of that team. Few companies focused on seeds suitable for the pre-produced market do. The best do it, and Initialized is one of them … The community has a database of investors to help them choose, and Initialized tops the chart and will be as long as it continues to do no harm and help. This also does not change.

These are just the first questions about the creators and the competition we have for the future of Y Combinator. Luckily Demo Day, which will take place next week, will continue the conversation.

For my full interview with Tan, check out my story on TechCrunch: “Garry Tan’s Return is a Closing Time for Y Combinator.” And, to thank you for being a Startups Weekly subscriber, here’s a small TC + discount for you: Enter “STARTUPS” at checkout for 15% off your subscription.

In the remainder of this newsletter, we will enter the surprising closure of an app, the latest and greatest on holiday rounds, and a following on a data-driven fund. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter. I appreciate your support, as always!

Zenly’s ending

Earlier this week, Snap laid off 20% of its global staff in an effort to restructure its business. The cut comes after CEO Evan Spiegel’s May note, in which he wrote that the company would miss its second-quarter revenue targets.

And the layoffs aren’t the end of the story. Snap is slowing the production of Snap-funded originals, minis, and games, hardware, Pixy Drone, and standalone apps that include Voisey and Zenly. Beyond the fact that Snap says he’s still developing his own augmented reality glasses, called Spectacles, the surprising tidbit in that refocus is the closure of Zenly, a hugely popular app that was acquired five years ago.

It is common for companies to shut down apps, especially acquisitions, after years of work during restructuring efforts. Plus, Zenly doesn’t generate a lot of direct revenue and still works as a standalone app. However, as my colleagues Paul Sawers and Romain Dillet point out, there was quite a bit of a shock when Snap sneaked into the closure.

Here’s why it’s important: Sawers and Dillet point out, “Zenly showed no signs of stagnation and, if nothing else, it looked like it had the potential to be one of Snap’s most valuable assets if only he could figure out how to turn it into a money-making machine. “As you will see in their story, it turns out that the stoppage could be Snap playing defense, not just offense.

Image credits: Zenly

Let’s talk about party rides

This week I delved into a time-old debate on Equity Wednesday and TechCrunch +: party round! The positives are obvious: with more investors in their capital table, startups have more routes of distribution, introductions, and advice throughout their lifecycle.

The cons are more complicated. Is the all-round investment as useful as capital from fewer sources of commitment? Are there too many cooks in the kitchen? Is this a bad sign that this startup had to collect from dozens of people instead of a high conviction partner?

In my story, I interviewed three people from all different seats at the venture table, from the engineer who drives the products to separate these processes, to the party round startup that raised a party round, to an investor whose job is collaborate (and sometimes compete with) the flurry of angels interested in these rounds.

Here’s what’s important: I love it when debates really make a difference, and in this case they do. It appears that the definition of a party round has changed over the years, in part in response to many of the dynamics that appear when there is no specific lead investor in a funding round.

Celebration with balloons, confetti and cupcake

Image credits: releases

The continuation

I’m experimenting with a new section in Startups Weekly, where every week we follow an old story or trend to see what has changed since our first look. This week, I checked in with Abe Othman, the brains behind AngelList Venture’s data science, including his $ 25 million Quant Fund. In December 2021, I broke the news of the startup’s new fresh fund, which is an investment vehicle hoping to implant $ 250,000 checks in over 100 companies.

The fund’s big breakthrough is its approach to using quantitative factors to decide which startups to invest in. I then reported that his team tracks the speed of application intake for a startup, looking at how many job applications a single company receives within a specific time frame. The signal eliminates factors like investor bias, founder networks, and even attractive valuations.

Here are the news: The fund has distributed roughly $ 6 million, about a third of the fund, into 530 startups since December, with over 35 larger checks in high-signal startups. Othman says the fund’s largest checks went to women and minority founders with a higher percentage of the total portfolio composition than the firm in general. Othman estimates that nearly 20% of their portfolio is made up of women.

“As you know, we intentionally practice risk investing in a distinct way … our largest portfolio allocations are to founders responding to a cold outreach email, which requires some trust from the side. them, “he added. It’s in line with what you said last year, when you described the company’s cold email approach as “less contradictory” than other funds out there.

Yellow Calculator On Purple Background;  financial model for fundraising forecasting

Image credits: Javier Zayas Photography (Opens in a new window) / Getty Images

Wait for it. Watch it? Yes, I’m excited too. And while we’re on the subject of cleaning, a few more notes:

  • Listen to TechCrunch’s podcasts, including our cryptocurrency-focused show that runs from Chain Reaction and the founder-focused show that runs from Found. The TechCrunch Podcast continues to keep me entertained too, so pay attention to any good shows they’re putting out.
  • Remember that TechCrunch Live is on a brand new platform and we have simplified the application for the field tutorials. Investors (and my inbox) can attest to the importance of brevity, wisdom, and clarity in presentations, so it’s great to watch. Startups can now apply any day, anytime for Pitch Practice by filling out this form.
  • TechCrunch Live is coming to Minneapolis. On September 7, come and meet us with the TechCrunch crew as we interview the best and brightest in town. Minneapolis is among the best cities in the Midwest to start a business, and you’ll soon learn why!
  • Go dig for opportunities at TC Sessions: Crypto, this November in Miami. Yes, you heard right, we’re on our way to Miami.

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And that’s right, another week draws to a close. This was odd. I met one of the most famous actors in the world, went viral on Twitter and ate amazing pasta at Che Fico. This newsletter increasingly feels like a weekly journal entry about the wacky world we’re all in, half-baked stream of consciousness and all. Thanks for reading and have a nice weekend.

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