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There's no question that having a low personal burn rate is an advantage when it comes to starting a startup.

That said, there are a lot of alternatives. There are more seed funds now than ever before. One of the reasons we did this program is that we believe there is hole in this part of the market--it feels like there are more people willing to write a $100k check than a $12k check.

Practically speaking, we also felt this was where we could make the most impact with dollars we're giving away. $12MM is the price of a small series B, or 1000 YC Fellowships.

I'm really excited about this move. When I was working on my startup, broke, fresh out of grad school, $12k could have been the lifeline we needed. Instead, we had to stop building while we tried to raise funds prematurely, and bled out before we could pick up momentum.

As long as you guys are as selective as you are with the startups you fund, I think we may well see a whole bunch of startups in 5 years that we can trace back to this fellowship. I think this is a great first step to leveling the playing field for those who don't come from / don't have a whole lot of capital, and might just need a shot. Very timely, in light of the recent Quartz article [1].

[1] http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-...

This also keeps YC relevant even though the world in which they were created largely no longer exists:

- In 2005, there were essentially no sources for early stage capital. Now you can't tell someone about your startup at a meetup without five people trying to throw money in your face.

- In 2005, information about starting a startup was an oral tradition, and web technology was so primitive that making a scalable website basically required a CS degree. This meant that you really had to either be a business person or a CS person, whereas now being both is table stakes.

- In 2005, not only was it essentially impossible to meet VCs without some sort of special connections, it was difficult even to figure out who they were. These days they're all on LinkedIn, blogs, angellist, mattermark, etc., and as soon as you have any sort of traction they already know about you.

- In 2005, people still spent time dreaming about what the world would be like when everyone was connected to the Internet. Now the sociology is well understood, the infrastructure has matured, strategies and tactics have become commoditized, etc.

By giving away equity-free grants that come with access and advice, this basically positions YC as the next YC, regardless of what else is going on the world.

Fascinating that you are even considering making 1,000 investments per year - how are you planning to handle the processing of applications? Outsourcing, growing the YC team, AI?

You're opening up to the entire world with that seed amount, that volume (which lowers the effective level required) and no requirement to move, so there could be as many as (say) 100,000 applications a year...

I would really love to see an option for people who are not in this group.

I'm sure many people would. Your proposal appears to be that YC do this exact program, but with a 200k+ grant instead of 12k. This is obviously not feasible, given that these grants are being awarded for little more than an idea.

Founding a startup is a huge risk, there's no way around that. If you're at a point in life where you can't afford risk and instability, it's going to be tough to start a startup.

Frankly I don't really get the "startups are only for young people with no obligations" problem. You have a wife, and kids, and a house, and hopefully these things bring you great joy - the prototypical obligation-free startup founders have none of them. Should we be looking for ways for young startup founders to do the family-building stuff they are missing out on? Maybe set up a fund to give them a down payment for when their startup fails and they could have been saving up with a paycheck for a few years? It just seems like...sometimes in life you have to choose one thing or the other.

You're leaving something out of your analysis, aren't you?

The type of experienced professionals that GP is talking about aren't going to waste $200k.

They currently add value to whatever enterprise they are engaged in.

> sometimes in life you have to choose one thing or the other.

Sometimes in life, you don't know that you could take the widget industry by storm until you've consumed a thousand variations of widgets yourself.

...Gah, no wonder the "get off my lawn!" thing exists... :/

They currently add value to their current enterprise. That doesn't mean that they will also add value to some other enterprise, i.e. a startup.

The percentage of experienced professionals why waste the grant might be smaller than the percentage of just-out-of-college teams who waste the grant, but the difference might not be as large as to justify $200k.

"This is obviously not feasible, given that these grants are being awarded for little more than an idea."

A patent is an idea, sometimes worth nothing and sometimes worth 10's of Billions.

Some would say that the fact that a patent is sometimes worth 10s of billions is a flaw in the current legal system. While true, I don't think YC is in the business of funding patent trolls.

A patent being worth billions is absolutely not a flaw of any legal system.

If you're a successful engineer in your 40s and have a full-time job, a family, and a mortgage in the developed world, you probably don't need $12k. That's at most two months' worth of regular salary for an experienced engineer in the U.S, and more likely just one month. You can easily save up or take out a loan with favorable interest rates if you're really passionate about doing something.

The problem is that since you already have so many long-term obligations, you cannot afford to fail and then not go back to your previous position. It doesn't matter whether the grant is $12k or $240k. That grant is gonna run out in a few weeks or months, and remember, most startups fail. And then what? There's no guarantee that your previous employer will want you back.

The need for stability, not the amount of the grant, is what's keeping older people from getting involved in startups. A startup is a risky investment, not just of money but of your life in general.

I'm married with two kids and a mortgage and I am applying. I am in an industry that has tons of room for innovation but the established firms (banks) really struggle with it as I have seen throughout my career. Too much riding on the status quo.

I read this a week or so ago and I think it is applicable to my (and many other) industries.

http://www.gsb.stanford.edu/insights/technology-small-fish-a...

I've been thinking about this startup for a few years and now is the time to make the jump. I'm not getting any younger. :)

Really curious about your idea. I've had a few startups myself in the e-commerce/fintech space (1 failed, 1 sold) and now working in the R&D department for one of the top 3 U.S. Banks. My goal was to use my time here to figure out the next good idea, but haven't come across anything yet that would fit my criteria for a good startup.

Also married and expecting twin girls, so also have the issue of giving up too much stability..

Congratulations on the girls! I tell everybody that you cannot understand being a parent until it happens. Everything is 10x-100x more than what they say. You know you will love them but don't even know what that means (and it grows with each day). People say you will be tired but you don't really know what that means for the first two months. Totally awesome though. They are now why I do everything I do.

Anyway, my idea is in the 401(k) industry which I have worked in for 13 years. Every provider has websites from prior to when web 2.0 was a thing. Individual service is expensive for providers and companies. Many people question Social Security. Financial wellness is the buzzword of the day but I truly believe that getting people who are living paycheck to paycheck some solid knowledge and advice that a difference can be made. Getting their employers to pay for it via the 401(k) might be the way to go.

Thank you! Yep, that all sounds too familiar. Everybody's been saying with twins it will be extremely tough but well worth it :) I'm kind of glad we're having twins right off the bat since there's nothing we can compare to.

Being somewhat new to the whole 401k thing (I came from another country and only had a 'real' job for the last 2 yrs) I believe I'm your target customer. Now, 2 years later I like to think I kinda figured it out. Few observations I've had so far that may help you: - my preconception is that if the employer doesn't match, there's no use to put anything in it - I'm sure I'm wrong but would be nice to have a way to (visualize?) what my gains could be anyway and prove me wrong - by default, the service provider usually invests in the employers stock (right?), I know it's possible to split it up in different funds but would be nice to get better recommendation on how to diversify the investment and be able to simply choose on a grade from 'higher return, but risky' to 'low risk but low returns'. I have had it that I had no idea where my 401k went and luckily the employers stock did pretty well during that period but would be nice still to have a better understanding/education on how to best split and allocate - probably not part of your core solution, but my wife found it very hard to transfer 401k between providers after leaving a job. I've heard from others as well as where they have 3 or 4 401k accounts with different providers because it can be hard and time consuming to consolidate.

I think there is a big opportunity to innovate on overdraft protection and those crazy fees.

Totally agree, however banks actually make a ton on all kinds of 'service fees' so they like for you to overdraft and will be hesitant to do anything about it. I do believe though that if you were to start a new consumer bank from scratch, that could be one of the USPs.

People with years of experience who have already been in industry should already have lots of money saved up. The $12K is useful for college students with no money and loans.

Joining a startup is only not feasible later in life if you're living paycheck to paycheck, which you shouldn't be doing for other reasons.

People who have a family generally aren't excited to burn their safety net on a hope and a dream. At least I'm not. I would imagine most, like me, would expect that safety net to carry them through finding a new job should the YC thing not pan out.

Or are you implying that you think everyone with 10 years of experience has a year of living expenses in the bank? If so, I tip my hat to you, but paying off student loans, buying a house, and having a kid haven't really made that a possibility for me.

Then don't start a startup. If you're not willing to work hard and lose some money, then maybe you shouldn't be starting a company.

There's no free lunch. I would love to be able to work hard during the days at the company I'm with, work on a side project at night, go to the gym every day, maintain a relationship, maintain a social life, and get 9 hours of sleep every day. But I really have to pick and choose which things I get to do.

Maybe that sweet spot is joining a funded startup, possibly at a very early stage? It seems like equity for early employees is on the rise, so that could become a pretty good version of the sweet spot (less equity, more cash).

Also - don't discount the part about participating from anywhere. There could be a handful of families whose accrued savings might increase significantly if coupled with a cost saving location change (i.e. moving away from NYC/SF/bay-area).

I agree for the most part, but it may well be enough to break through some inertia. 12k for a two man team is 3k/month, whereas in full time work most engineers would be making at least 10k/month. I know personally I'd be uninclined to ditch my entire income, but keeping at least a little trickle coming in would mean my savings wouldn't diminish quite so rapidly, and I'd probably be willing to take two months off to see how far it could accelerate my startup.

The real danger is whether follow-up funding could be found fast enough to have people quit their jobs and maintain the momentum achieved during the two month program.

That's the tradeoff that you make here is that it's not just about the money is it? I don't think YC has ever been about the money for a startup- even at $100K or whatever it is. It's about "access"...into the SV network, which gives you instant credibility to parlay that name into other funding, recruiting, partnerships, etc. So if you are a savvy entrepreneur you can leverage the fellowship in almost the same way as the YC batch.

Maybe this is also a way for YC to sort of draw a line in the sand between wantrepreneurs and the real deal. If you have an idea that keeps you up at night and you have decided to go all in, then this will give you a chance to prove it. no?

They could try this with a second experiment called "sabbatical."