May 26, 2022

Welcome to Startup Weekly, a fresh look at startup trends from this week’s launch. To receive it in your mailbox, Subscribe here.

It’s YC week, and while I’m interested in how the influence of accelerators is evolving in the current environment, there’s always something to learn about the hundreds of founders who come together and introduce their companies to the world. In addition to some of my favorites on the gaming-updates and gaming-updates+ team, I covered the Y Combinator Winter 2022 demo day in a series of posts:

Now that we’re done, I want to leave you with a few conclusions that I’ve made after listening to hundreds of presentations. Here’s what the 411 Demo Day pitches teach you about startups:

In India, everything revolves around fintech: India was the most represented country, excluding the United States, in the 2022 Winter Party. For what it’s worth, over 191 companies in India have been funded through the Y Combinator accelerator, almost half to half! – companies accepted in the last 12 months.

  • Demo Day is no longer funded: This week during Equity, we talked about how the demo days in the utility have changed and whether performance as such has become obsolete. I won’t spoil my final conclusion but will mention some great YC data. This year, YC said it supports startups at all levels through its accelerator, and more than half of the companies have raised money prior to acceptance. What this means to me is that the accelerator is not really for a pre-seeding company asking for its first check, but for any company that wants to access the YC network.
  • Competition is inevitable: We’ve seen many startups this season mostly compete directly with each other, which isn’t a new trend, but perhaps more remarkable as the throttle gets bigger. Most budding investors I talk to try to avoid any form of conflict of interest, so having YC subsidiaries in the same field with similar business models and founding years is somewhat counterintuitive. The accelerator seems to have avoided social tension so far by isolating similar startups, but with an acceptance rate of around 2%, you have to wonder how comparable rates are set.

In September, I wrote an earlier version of this column titled “What 377 Y Combinator Presentations Will Help You Learn About Startups.” A few months later, the accelerator expanded: almost half of its enterprises are located outside the United States, and new offices are in New Zealand, Sudan, Uganda and Costa Rica.

I’ll remind you all, as I always do, that YC – akin to a single institution – is not exactly an example of the next wave of decision makers and leaders in startups. For example, rising check sizes have left many financiers who once fell prey to demo day floods of deals. And when it came to diversity, the accelerator kicked in to support some underrepresented groups.

In the remainder of this newsletter, we’ll take a look at India’s proportionately losing education technology round, as well as the unusual rise of the banks of the Cross River. As always, you can support me by forwarding this newsletter to a friend, Follow me on Twitter Or subscribe to my personal blog.

offer of the week

Plus class! As our own Manish Singh explains, “At a time when many edtech companies in India are trying to reduce their reliance on teachers, a Noida-based startup that allows teachers and creators to manage, manage and market courses to students is helping to do just that. So they have 70 million dollars. New round of funding. The startup, which is now worth $570 million, is only four years old.

Here’s why it’s important: Offline coaching, where teachers personally teach students about various subjects, is still very popular in India, but limited by geography. The worldwide pandemic and ubiquitous digitalization have prompted some educators to take advantage of online opportunities to grow their larger businesses. ClassPlus’ fundraising potential means there is enough demand in India’s urban areas to become a market to walk away from.

honorable mentions:

let’s get rid of this

Investors Vijay Chatha and Jay Kapoor, co-founders of a venture capital firm that grew out of a PR firm, recently wrote an article arguing that venture capitalists should be abolished proportionately. The duo relied on a portfolio review and found that investors rarely add value more than 90 days after signing a terms sheet. “At that time, the participation of investors is limited to their presence at the quarterly meeting of the board of directors – the main investor,” continues the opinion.

Thus, investors feel that their peers should not rely on contractual proportional rights unless they are registered with the company because “their presence on the capex table may deter other venture capitalists” discourages them from working hard for their founders.

Here’s why it’s important: Chatha and Kapoor’s arguments are controversial because they assume that investors will change their habits at the expense of their own profits. However, I love that he asks investors to raise the bar on engagement and influence once they reach that coveted seat at the capitalization table. In a struggling startup, it’s easy to walk away proportionately, but what about having to constantly prove your worth to your top ranked company? Incentive spread for days, if you ask me.

Other surprises of the week:

empty check SPAC

image credit: Lawrence Anaretta/Getty Images

From small to mighty, very fast

Cross River Bank has raised $620 million in funding at a valuation of over $3 billion. The company provides the technology infrastructure for venture capital-backed loans and payments, adding a sort of double-deal to the fintech boom.

Here’s why it’s important: Fintech startups raised $121.6 billion last year, up 153% year-over-year, but as Mary Ann pointed out, pouring millions of dollars into a traditional bank is unusual. Andreessen Horowitz General Partner David George explained why he is so interested in the company:

“When Coinbase first started looking for a partner bank, many traditional financial institutions had general policies that prevented them from participating in crypto,” said George gaming-updates. “Cross River, on the other hand, has shown the foresight to lean on this new frontier and support Coinbase and the many other big crypto firms that are happy partners so far.”

Verification days:

Image of a hand putting a speech bubble into a white piggy bank on a purple background.

image credit: Boris Zitkov (Opens in a new window) / Getty Images

during the week

We will meet in person! Fast! The 2022 gaming-updates Preliminary Phase is April 14th and it’s just around the corner and it’s taking place in San Francisco. Join us for a founding day with GV’s Terry Burns, Greylock’s Glenn Evans and Felicis’ Aydin Sekut. The TC team went out of their way to get back in person, so don’t be surprised if the panels are a little more expensive than usual.

Here is the full program and buy launch tickets here.

Follow our new senior crypto reporter, Jacqueline Melinek and our new senior corporate reporter, Kyle Vigers.

Finally, in case you missed last week’s Startup Weekly.Read it here: We’re trying to rebuild startup accelerators.

Seen on gaming-updates

a16z, NFX supports Latitud’s ambition to be “the operating system for every corporate company in Latin America”.

People send 7 billion WhatsApp voice messages every day

Are we going to see a unicorn sale?

Lightning strikes again when the power reaches the position of the unicorn

The bale of vainglory.+ seen on

Cryptocurrency mining is approaching a critical point

How to create a teaser trailer for your startup

Phil Haslett of EquityGen explains how startup valuation can harness their power

How Plaid’s CTO grew its engineering team 17.5x in 4 years

Do we see evidence of download delays?

see you later,

n

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