Comment by toomuchtodo | Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

Parent Full thread

I'm open to a debate on this. What's the failure rate only of startups that go through YC?

"Y-Combinator’s success is undeniable: the program has produced 37 start-ups worth over $40 million each in the past five years. In its first six years, 72 percent of Y.C.’s 249 start-ups raised money after Demo Day, and today, the average value of a Y.C.-financed start-up is $22.4 million. However, these statistics also reveal a grimmer reality: 93 percent of the 511 companies accepted by Y-Combinator have failed. Even more alarming, only 3 to 5 percent of the companies that apply to Y-Combinator are even accepted, meaning that only one in every 200 companies that applies to Y.C. eventually succeeds."

Emphasis mine.

[+] http://koltai.co/notebook/the-risky-business-of-entrepreneur...

EDIT: Please disregard this post. Left for historical purposes. sama notes that the stats are inaccurate.

EDIT 2: The citations in that link I mention above are from nytimes and business insider. They might be accurate, if a bit old, but require verification. Treat them appropriately.

I don't know where that statistic came from but it's nowhere close to accurate. Less than half of the startups we funded in the first 5 years of YC have died.

Also, he average valuation of all YC startups through w2014 (i.e. with enough time to have raised a first round) is now over $100MM.

What were the causes of failures for those YC alums that did fail? (Again, not trying to be combative whatsoever. I'm genuinely curious, if you're able to provide the data without compromising YC from a business perspective).

Think PG has documented this well, but in summary

- cofounder disputes - market timing - not continuing to find growth

are top 3

Personally, I'm less interested than the average valuation and more interested in their P&Ls. Of course, that's not the game YC is playing.

Are there any stats for YC-funded startups that have grown to sustained profitability, vs continuing to exist through additional rounds of funding?

According to Wikipedia, their best-known funded companies are: Dropbox, Airbnb, Coinbase, Stripe, Reddit, Zenefits, Instacart and Weebly.

Dropbox - Not public, probably not profitable

Airbnb - Not public, might be profitable, lots of legal questions.

Coinbase - Not public, raised $100m+, no idea if it's profitable

Stripe - Not public, raised almost $200m, almost certainly not profitable

Reddit - Acquired by Conde Nast (private), might be profitable.

Zenefits - Not public, probably not profitable, raised ~$500m

Instacart - Not public, not profitable, raised ~$300m

Weebly - Not public, might be profitable

So I'd say their track record isn't great on that front. I don't know of any meaningful ($1bn+) IPOs of YC companies (not to say that they don't exist). The fact that I had no idea what Weebly was until a moment ago probably means it's not one of their success stories. I suspect DropBox will IPO at some point, but after Box's IPO, they have an uphill battle to prove that they won't be the same dud. Coinbase I had forgotten existed, so I'm really curious what their deal is (especially considering their valuation is so high, I wonder if they can support it anymore).

Thanks for providing this. I'd like to turn this into a wiki or GH repo, aggregating all of the data.

Calling Dropbox having an uphill battle to prove their valuation is quite an understatement.

Box is trading at about 6x their forward revenue in valuation, versus cloud industry's 10-12x average, and during the last Dropbox round it was rumored it was valued at 40X its forward revenue.

Meanwhile Box is winning major partnerships and customers left and right and the market still hates it, I really wonder how Dropbox is gonna tell their story considering their vast consumer user base is a liability instead of asset when it comes to profitability.

"Less than half of the startups we funded in the first 5 years of YC have died."

But how many were successful, in the sense of paying back their investors? The most likely outcome of most VC investments is a "zombie", a company which can pay its own operating systems but is a net loss to investors. The usual VC stats are that about 10% are wins, 20% go bankrupt, and the rest drag on for years in zombie mode.

I can't reply to sama's comment below, for some reason, but I would be interested to hear the median valuation of all YC backed startups. My hypothesis is that number tells a very different story.

If we are taking the amount of risk I'd like us to be taking, it should be near 0.

Do all non YC accepted startups fail?

It appears, from data, that a majority of them do.

Reply on news.ycombinator.com