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Y Combinator is zeroing in on bigger, breakaway companies with a new growth-stage program

Y Combinator famously funds a lot of companies, but there’s always more it could be doing, said its president, Sam Altman, in an interview with TechCrunch this fall. “I do think startups are a super important vehicle to make things happen in the world today and I think we are nowhere near the limit of how many we can help.”

Altman had added that YC is “always slightly broken, because we’re always trying to grow; we’re always trying to do new things.” And while he didn’t offer specifics on what new things YC might try,  today, the outfit is taking the wraps off one of those initiatives: a new growth-stage program designed to help both YC companies and non-YC companies figure out how to scale.

The idea is partly to address what YC companies have described to YC as a thinning of its network over time, in part because there simply aren’t as many companies that make it to the growth stage. YC estimates that of the more than 1,200 active YC companies in the world today, about 60 or so employ more than 100 people.

YC also sees an opportunity to work with companies that are too busy trying to keep the wheels on the track to think much about the big picture. Some of the questions that founders tell them they could use help with are how to recruit engineers at scale, and how to accelerate user growth and acquisition systematically.

So what does the program entail? Seemingly not more than busy, growth-stage CEOs can handle. The idea is to work with 15 companies two times a year — in spring and fall — largely by bringing them together for weekly dinners where a variety of specific themes will be addressed.

According to partners Ali Rowghani and Anu Hariharan, who oversee YC’s two-year-old, later-stage Continuity Fund, admission will mostly be open to companies with 50 to 100 employees with strong market fit.

Asked by a founder on YC’s forum why they are focusing on employees rather than annual revenue, Rowghani says he agrees the number of employees “can’t be the only criterion. And it won’t be. But we’ve found that employee count is a decent proxy for the new kinds of challenges that emerge in growth stage companies.”

YC is also stressing that the program will be free to those selected. YC hasn’t responded to questions from TC yet regarding whether Continuity Fund might get first crack at these companies’ next funding rounds, but we’d guess that there’s no formal agreement between YC and the startups. (If YC builds good will with these founders and they turn to the Continuity Fund in the future, all the better, presumably.)

The Continuity Fund, which closed with $700 million in 2015, has reportedly been working on another fund. We’ve asked the company for an update about this, too.

YC will run its first batch in April and its second in September. You can find more information about how to apply here. We’re told startups can apply as soon as next month.

Published at Thu, 14 Dec 2017 20:40:04 +0000