Startups Can't Survive On $20,000

The $20,000 is absolutely not meant to last a year. It's meant to last a summer, only enough time until the startup can raise their first round which should ideally be the end of the summer. Maybe a bit after if they're having difficulty.

Any startup trying to survive for a year on $20k has already failed.

Also, from a linked article, this gem: [1]

> The terms originally made sense because YC was unproven and only funding eight companies at a time. Almost ten years later, Y Combinator has turned into a semi-annual factory of 50 companies...

That's precisely why terms can stay this way. Funds with less of a reputation and track record have to kick in more money, not less, because they bring less to the table without it.

A VC like YC could effectively give $0 and probably still be worth the 7% for the connections/track record alone.

1: http://ycuniverse.com/y-combinator-companies-potentially-wor...

1. YC invests $11,000 + $3,000 per founder. So $17,000 for two founders; that should get them through the summer or winter, depending on which batch they're in. This money was never intended to last a year.

2. Each startup has the option of a $80k? (the amount has changed over time, I believe it's higher now) convertible note from Ron Conway/SV Angel. Some will take the note, some won't.

No one in Silicon Valley raises $20,000 and expects it to last one year.

I found the article about creating a startup in Thailand [1] really interesting from a cost-of-living perspective. I'm sure many other entrepreneurs here can weigh in on other inexpensive cities in which to live and create a startup.

But the YC example doesn't quite back up the main story well. For most entrepreneurs, they won't be getting that $20k. Personally, I'd rather get $20k than $0k. Or, heck, the network and investment signal that an accelerator like YC affords.

[1] http://levels.io/bootstrapping-startup-thailand/

Step 1: don't live in Bay Area.

$20k is a lot of money. If your business is doing well or shows promise, YC will help you raise since they don't want to waste their investment. So just do a decent startup and you'll be fine.

I personally love the concept of yc, and see the value but for a good portion of the entrepreneur community it can't work out because of the economics. I would love to see a accelerator give enough money for a realistic budget for a seasoned team. Including myself I have 4 people on my team and we are 3 seasoned developers and an executive with lots of experience as a CIO and CFO. We have real bills and can't live on peanuts, mortgages, kids, need for real health insurance, etc. We are more expensive, but we can outbuild probably most of the teams out there, and especially the ones that have little experience. I wonder if much of the reason we have so many failed startups is that we are don't bet enough on seasoned individuals unless they have enough cash to carry them through the early stages. I would love to see what would happen if pg did a session of YC looking for seasoned teams what would happen. I'd be willing to bet you'd have a good chance for some amazing results, even if it would be more expensive.

$20,000 Is An Impossible Budget

And yet many many YC-backed companies have made it possible.