Many new ventures join the startup world every day. Some become household names. Others will close in just a few months. To become a unicorn startup, you probably need the help of the so-called startup accelerators. Y Combinator is an American tech startup accelerator that has funded over 3000 startups and has helped many of them to get the status of unicorn startups.
What is a Startup Accelerator?
A startup accelerator is a support mechanism for entrepreneurs. Startup accelerators, also called seed accelerators, offer programs to bring the basic skills required to be a founder and help grow your startup. These programs are run for short periods to deliver specific knowledge.
Accelerators create intense content and offer support at many points through mentorship, networking, dealing with legal issues, creating office space, and finance for startups.
Y Combinator – The World’s Most Famous Tech Startup Accelerator
Y Combinator is one of the oldest and best-known startup accelerators in the tech field. Their program started in 2005 in Boston, and in 2008, they opened another branch in Mountain View, California. In 2009, the company closed their Boston branch; today their program only runs in California.
Y Combinator has seed funded over 3000 startups, and the combined estimated value of the startups they have helped is around 300 billion dollars. Some well-known brands like Airbnb, Dropbox, Reddit, GitLab, etc., were funded by Y Combinator.
What is a Unicorn Startup?
The founder of Cowboy Ventures, Aileen Lee, used the term “unicorn” for the first time in her article “Welcome To The Unicorn Club: Learning From Billion-Dollar Startups” published in TechCrunch in 2013.
The term unicorn startup defines a private company with over one billion dollar valuation. The evaluation process is different from traditional valuations. It doesn’t solely depend on financial performance but also the business potential, growth rate, etc.
What Makes Y Combinator Successful at Building Unicorn Startups?
In a nutshell, networking. Y Combinator is the oldest startup accelerator in the tech field. Being the oldest comes with advantages for them and the startups to get the chance to work with Y Combinator.
- The startup accelerator has an Alumni Network of 7000 founders. This number increases every year.
- They offer the founders easy connections with each other via their expertise database and Bookface Forum, which they describe as a platform mixture of Facebook, Quora and LinkedIn. Besides these tools, the founders can use the email list of specific communities.
- Along with providing online access to alumni, they organise Camp YC each year to bring the founders together.
- Being in the Y Combinator network gives you a chance to win your first customers. Y Combinator says, “B2B and consumer companies often get their first 40-50 paying customers from the YC network.”
13 Y Combinator’s Unicorn Startups
Airbnb is an online platform for renting a room, a bed, and even an entire house for a few days. The company was founded in August 2008. The founders, Brian Chesky, Joe Gebbia, and Nathan Blecharzyk, struggled to find investors and were rejected many times. In 2009, Paul Graham invited the founders to join Y Combinator and offered funding in return for a small stake in Airbnb.
Y Combinator helped the founders build better products and introduced them to investors. Airbnb’s valuation reached $113 billion in 2021 and has the highest valuation among the Y Combinator’s Unicorn startups.
Stripe is a payment processing firm. John and Patrick Collison founded Stripe in 2010. Stripe is the brothers’ second startup. They joined Y Combinator in 2007 for the first time with Auctomatic, received investments and sold it to a Canadian company.
In 2009, the brothers joined Y Combinator once again to make their pitch and get the attention of potential investors. Crunchbase says in an article published in 2021 that the company’s valuation is $95 billion, and it collected $2.2 billion from 39 investors.
Instacart is a grocery delivery service. Apoorva Mehta is the founder of Instacart and since 2012 it operates in the United States and Canada. Instacart was part of the Summer 2012 batch of Y Combinator. By March 2022, its valuation was over $24 billion.
Coinbase is a cryptocurrency exchange platform. The startup was also Y Combinator’s Summer 2012 batch. The founder, Brain Armstrong, worked at Airbnb as an engineer. Armstrong received $600,000 in seed funding from various investors, including Y Combinator. In April 2021, Coinbase was valued at $86 billion and reached the highest share amount in dollars in November. However, after November 2021, the share price dropped.
DoorDash is an American online food ordering and delivery company. DoorDash received $2.4 million in funding shortly after the Demo Day of Y Combinator. In 2022, Doordash’s market cap is more than $25 billion.
Cruise focuses on autonomous vehicle technology. Cruise joined Y Combinator in the Winter 2014 batch. Founder Collective, Maven Ventures, and Spark Capital provided the funding. Since 2016, General Motors has the majority stake of Cruise. After its latest funding round in 2021, Cruise’s valuation is over $30 billion.
OpenSea is a NFT marketplace. It was founded by Devin Finzer and Alex Atallah in 2017. OpenSea graduated from Y Combinator in 2018 from the Winter batch. It received a $2.1 million strategic investment from various investors in November 2019. In 2022, after a fresh round of venture funding, OpenSea’s value was raised to $13.3 billion.
Faire is an online wholesale marketplace. The startup joined Y Combinator in Winter 2017, the same year the company was founded. In 2021, after the Series G funding round, the company’s valuation reached $12.4 billion.
Brex has worked as a financial service company for business and tech companies since 2017. In January 2022, Brex confirmed that after their Series D-2 funding, Brex’s valuation increased to $12.3 billion.
Reddit is a social platform where users create communities under different topics and interests and discuss or vote on the entries. Founded in 2005, it’s from Y Combinator’s first-year batch. In 2021, after its latest funding, Reddit’s valuation increased by more than $10 billion.
Gusto provides human resources management and payroll software for businesses. The startup was founded in 2011 and graduated from Y Combinator Winter 2012 batch. In 2021, after having a successful funding round and collecting $175 million in funding, Gusto’s valuation was estimated at a bit more than $9 billion.
GitLab is a development and operations (DevOps) platform and service provider. It’s from Y Combinator’s winter 2015 batch. In 2019, the company’s value reached $2.7 billion.
Dropbox provides a cloud file storage service. The founders, Drew Houston and Arash Ferdowsi, joined the Y Combinator in the Summer of 2007. Their market cap is more than $7 billion.
You can find the full Y Combinators top companies list on their website.
Y Combinator’s success not only comes from being the oldest tech startup accelerator, as they’ve built a well-established networking system for the entrepreneurs. Having a smart, rich network for each startup is crucial to getting a head start—these unicorn startups’ accomplishments are connected with their network connections and their exciting ideas.
If you want to learn a bit more about networking, read “How to Network as an Entrepreneur” on our blog.