Startup Advice and Insights from YC Partners Adora, Anu, Kat, and Kirsty
Note from the Elpha Staff: We're resurfacing our early office hour conversations with industry experts in a more digestible way, let us know if you have any feedback in the comments. Thanks!Adora is former founder of Homejoy (YC S10) and current YC Group Partner (which means she advises YC startups most closely). Anu is a partner for YC's Continuity Fund, which makes investments in growth-stage companies. She was previously a partner at a16z. Kat is YC's Director of Outreach which means she helps spread the good word about YC to students, cities, and countries who don't already know about us. Kirsty is YC's CFO and has witnessed something like 20 YC batches. In addition to watching YC grow from its earliest days to the behemoth it is now, Kirsty is an encyclopedia of knowledge about startup financial and corporate structure, and how to grow right.These are the highlights of their AMA (read the full conversation here).Q: Have you observed any differences between female founders and male founders in aggregate? (This Q can be generalized to broader groups of underrepresented founders) Do you see any trends in the type of industries, strategies, or operations that turn out to be an advantage or even disadvantage?Adora: The others probably have a more developed, deeper view on this than me (they've been investors far longer, and so have a much larger data set in their heads). What I have noticed is a disproportionately higher number of female founders in biotech and CPG. I suspect the former is because the field (in college and research) is more inclusive of women than say computer science. And the latter is because, well, women are the main buyers.Anu: The big difference I have noticed in fundraise pitches is - women founders don't sell themselves as well. Often the women founders are crushing it and are super thoughtful about cash burn but when they present at an "All Partner" meeting, they rush through the presentation and often feel a bit under confident. If you are doing much better than a competitor it is ok to take a moment and say that you are doing WAY better than competitor.Q: Anu, was the decision to migrate from Andreessen to YC a tough one? What tipped the scale for you?Anu: I consider both a16z and YC as transformational to the VC space. I had interacted with so many YC companies during my time at a16z. What stood out for me was how founders spoke so passionately about YC - both the network and the Partners. During my interactions with YC partners it became clear to me that the mission was a lot bigger and the amount of impact we could have in enabling startups globally was a lot more. On a personal note - I am a bigger fan of growth stage investments and the opportunity to help build the Continuity Fund for YC was what tipped the scale for me. I also liked the transparency of all the Partners through the interview process.Q: Kirsty, what's one administrative/financial/legal thing founders should do in the early days to make their lives easier as their company grows?Kirsty: There are a few things that you can do in the early days that will make your life easier down the road. These are all things that we've had to help founders with.1) Incorporate as a C-Corp if you plan to take external money. Use a service like clerky.com to incorporate or lawyers who are used to startups.2) Keep all the incorporation documents as vanillas as possible - there is no need to add fancy vesting provisions, worry about super-voting etc when there are just the founders. Adding in non-standard items will make the process much more expensive.3) Make sure to actually issue stock and /or options to yourselves and employees. Just agreeing that they will get stock isn't enough - there is paperwork involved.4) Have a folder of all the signed documents in relation to anything to do with incorporation, equity allocation, employee documents and keep everything well organized. Make sure that the documents you save are all fully executed, which means that they should be the full documents plus signature pages, have dates filled, no [ ]. Don't just have random signature pages floating about.5) Keep your cap table up to date and make sure you understand how any convertible notes or safes will convert in a (hypothetical) priced round.Q: Kat, what is your dream batch composed of (in terms of company verticals, age, gender, ethnicity, etc.) and what do you think is your biggest challenge in creating that from the ether? Kat: This is an enormously meaty question. Vertical: I'm delighted by the range of companies we accept. In this batch (S17) there's everything from b2b software and dev tools aerospace and biotech.One thing I like about YC is that we don't put too much emphasis on predicting the next big idea or vertical. What we do know is that great companies are started by strong founding teams. Our focus has always been more on founders than on verticals.Age: The average age of a YC batch has been between 28-30 for the past few years. This batch, we have a 15-year-old founder and a founder in his 60s. There's a myth that YC is all people in their early 20s. That's actually not the case at all anymore. I'll have to look at the data, but my sense is that there's been a decrease in people in their early 20s starting companies. Many college students I talk to have a hard time turning down offers at larger tech companies that offer a 6-figure starting salary out of the gate.Gender: Roughly 13% of the founders that apply to YC are women. I'd love to see that % closer to 50% (or even 30%). I focus on getting more women to apply because we've seen that the % of women we fund usually matches the % of women who apply.Race/Ethnicity: I'd like to see the demographics of a batch better reflect the demographics of the country. One thing we've seen positive movement in is an increase in international companies applying to YC. We did an international tour last fall and we saw an increase in applications from India and Nigeria. 40% of the Winter 2017 were companies that came from outside the US.