Site Menu:

Introduction
Traditional Businesses
Opportunities Arise Online
Micro Seed Funding
Y Combinator Alternatives

ADVANTAGES:
- Starting Capital
- Ability to Sell Early
- Relocation to Startup Hub
- Weekly Dinners
- Knowledgeable Advice
- Demo Day
- Experience

DISADVANTAGES:
- Low Valuation
- High Risk of Failure

MY EXPERIENCE

HELPFUL RESOURCES


This website was created
by Dan Veltri, an entrepreneur
and founder of Weebly.

(Note: For the purposes of examining micro seed funding, Y Combinator's program will be used for the analysis because they pioneered the funding strategy and have the most developed program)

Advantage: Easy Starting Capital

One of the biggest advantages of Y Combinator funding is that it is a painless source of money.  The 28 question application functions similarly to a traditional business plan, but is shorter and to the point.  Soon after submission of the application, groups will find out if they were selected for an interview.  The traveling expenses to either Boston, MA or Mountain View, CA are covered by YC.  The interview takes about 15 minutes, with the majority of the time spent demoing the product or prototype the team has already started building.  The interviews are carried out over a weekend, with 15 to 20 groups being interviewed each day.  Decisions are made fast.  Teams receive a call from Paul Graham, usually around dinner time of the day they interviewed, telling them whether or not they were accepted, and if so, the amount of money YC would be providing, the equity stake, and company valuation.  Groups have to decide within just a few minutes if they want to accept the offer.  If they accept, the founders are cut a check for their initial expenses the next day.

With the Y Combinator model, the process to raise starting capital is basically compressed into a weekend.  There is no negotiation, no involvement from lawyers, and most importantly, almost no time spent distracted from development of the company.  The same cannot be said about money raised from other sources such as angles or venture capitalists.  These deals involve many meetings, negotiations, and legal expenses.  Since YC uses standard incorporation paperwork across all startups, the entrepreneurs do not have to pay any legal bills, nor hire a lawyer to negotiate on their behalf.  

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