Y Combinator Application Guide for African Startups

y-combinator-african-startups

What is Y Combinator?

Y Combinator provides seed funding for startups, investing $125K for a 7% equity stake in your business. Y Combinator’s goal is to get you through the first phase of building your business. This usually means: get you to the point where you’ve built something impressive enough to raise money on a larger scale. Read more here.

Why apply to YC?

  • YC’s Unmatchable Track Record – YC has a reputation for identifying and supporting the most innovative companies.
  • YC partners are experienced operators themselves who have spent a lot of time figuring out how to help you make things people want.
    Higher Valuations for Your Startup – historically, YC companies get, on average, 1.5 – 2x higher valuations than non-YC companies.
    Access to the Best Crop of Investors – the YC Batch is one of the most heavily scouted groups of startups in the world.
    Lifetime support from one of the most vibrant startup communities.

Application Guide for African Startups

Below is a detailed guide to help you complete your application. We hope this guide helps you apply with confidence, align with YC’s criteria, and show Silicon Valley how you’re building the next multi-billion dollar business from Africa. This guide includes:

  • Application Priorities
  • Key considerations
  • Advice from YC Partners
  • Some Question Tips
  • Misconceptions Africans have about YC
  • Links to other useful resources

Application Priorities:

  • Describe your company in 1 sentence without jargon.
  • Demonstrate your traction (i.e. what have you done and in how much time?)
  • Show why you are the right people to build this.
  • Show who is on your team and that you can build technology.
  • Explain how you believe you can become a billion-dollar business or reach $100m in annual recurring revenue.

Key Considerations:

  • A MUST: Have a technical cofounder
  • A MUST: All founders must have at least 10% equity
  • The application has 2 parts: written application + in-person interview. A video interview could happen after the written application if YC needs more info.
  • The in-person is not guaranteed.
  • All co-founders must submit an application. One cofounder will submit the main application and the other co-founders will submit a follow on portion.
  • Deadline: Applying before the deadline ensures your application is reviewed earlier than others. However, you can still submit past the deadline.
  • Applying multiple times is common. If you don’t get accepted for this batch, try again and show your progress. If you’ve applied before, apply again this time and show progress.
  • Regardless of what stage you’re at, still, apply for YC. The exercise of sharing a clear value proposition, getting feedback from alums/other founders, and seeing opportunities and gaps with your product are invaluable for your team’s growth.

Advice from YC Partners

“What we look for in founding teams…”

  • Founders who can build the product
  • Companies that require software in some way (with at least one engineer on the founding team that’s ideally built it themselves vs outsourcing)
  • Communication. They need to be able to describe what they’re doing and why it matters to people outside of their domain
  • People who are going to build their company regardless of us
  • Teams that are familiar with each other with a productive/healthy dynamic
  • Fast. If they’ve applied before, we want to see significant progress
  • Working on mostly meaningful things (building/talking to users/selling vs advisors/biz plans/partnerships)
  • Equity split – as close to equal as possible
  • Unique insights
  • Team vs. solo founders (however, solo founders are still accepted. See Common Misconceptions. Shola Akinlade of Paystack applied solo until YC asked him about a co-founder and he asked Ezra. See Shola’s explanation here)
  • A launched product

YC Partners care about the Market…

They want to know: is this a multi-billion dollar market? Can this become a billion-dollar company? Is it solving a problem of significance?

YC Partners care about Traction

They’re asking themselves: is the amount of work this company has done since starting impressive? Are they moving faster than their competitors? Have they built an MVP and if so how long did it take? If they don’t get into YC – will they continue working on this company? Are they dependent on investment to move forward?

When reviewing applications, YC Partners prioritize…

Concise answers. Numbers. Team. Proof you’re making something people want. Proof they can build/execute. Answers to “Why?” and “What do you know?” Critical insight. Market.

You should also watch this AMA Chat with YC Partner, Kat Mañalac.


Question Tips

You can listen to a question-by-question walkthrough of the Y Combinator application hosted by Iyinoluwa Aboyeji here:

Below, we also share a few general tips to consider when answering YC application questions:

COMPANY

Q: If you have an online demo, what’s the url?

Tips:

The demo video is separate from the 1 minute video. If your product has a demo video, submit that and a separate video with the founding team.

Q: Describe your company in 50 characters or less.

Tips:

  • Framing African problems and solutions to a global audience can be tough. Simplifying the complexities can be even harder. One hack is to reference a well known and impressive international company. I.e. “Hubspot for informal sectors,” “Uber for motorcycles.” This approach helps you meet people where they are/what they know.
  • Avoid jargon or marketing speak like “revolutionizing,” “disrupting,” “innovation” etc
  • Be clear and simple. Imagine the reviewer repeating the description to someone else. Make it easy and repeatable so interest can spread.

Q: What is your company going to make?

Tips: 

Describe, 

  • What your company does and how it works
  • What your company is building/has built (particularly the technology)
  • What user/customer you serve now and potentially later 
  • What value you’re bringing

 

FOUNDERS

Q: VIDEO

Please enter the url of a 1 minute unlisted (not private) YouTube or Youku video introducing the founders. (Follow the Video Guidelines).

Tips:

  • See YC’s video guidelines and adhere to them closely
  • The video appears at the top when reviewers read it. It frames how reviewers will read the rest of your app so it should give an overview of your company
  • Be concise and get to the details that truly make your specific business exciting and investable (traction, market, team, insights, etc.)
  • Ensure all cofounders are in the video (either in the same room or separate videos spliced together)
  • Don’t shy from showing your personalities
  • Have good video and audio quality (a bright, clean setting/room, minimal audio interruptions, clear video, etc)
  • While YC prefers that videos not feel released and scripted, we strongly recommend practicing your pitch for audio, video, timing, and content flow. YC Alums have admitted to scripting and rehearing their pitch video numerous times before submitting the best version.

 

PROGRESS

Q: How far along are you?

Tips:

  • Demonstrate traction: users/customers, revenues, product/feature updates, pilot/test results, licenses, waitlists, partnerships, markets
  • If you’re having trouble remembering all of your progress, or feeling like what you have is good enough, ask your team to list all of the wins in the last 6 months. Select the best ones that tell a story about how much traction you’ve made in a short period of time. 

Q: How long have you been working on this? How much of that has been full-time? Please explain.

Tips:

  • Demonstrate your team’s commitment overtime

Q: If you’ve applied previously with the same idea, how much progress have you made since the last time you applied? Anything changed?

Tips:

  • Progress between applications is a positive indicator for YC
  • Demonstrate how much your company/product has improved, increased traction, pivoted, gone live etc

IDEA

Q: Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you’re making?

Tips:

  • This is a great time to communicate the market opportunity, why YC should care, and your unique knowledge/research/diligence/track record.
  • YC wants to back multi billion dollar businesses. Show that your company has that potential and what background your team has to get it there.
  • Tell a story around your years of experience so it’s a no brainer why your team is meant to build this business. Don’t undersell yourself here. Concisely share impressive details.

 

Q: What’s new about what you’re making? What substitutes do people resort to because it doesn’t exist yet (or they don’t know about it)?

Tips:

  • Answer how your company is unique, first, taking a different approach/model. What are you bringing to the market that’s indispensable? What are the pains that you’re alleviating considering what’s available in the market?
  • If there are other similar companies in the space, give yourself the credit for what you’re doing differently. Highlight that difference or newness – even if simple. Don’t undersell yourself here. 

Q: Who are your competitors, and who might become competitors? Who do you fear most?

Tips:

  • Be honest here. If necessary, share their limitations and your competitive advantage.

Q: What do you understand about your business that other companies in it just don’t get?

Tips:

  • Think carefully about the specific and unique insights your company has over others.
  • Address what your competitive edge is.

Q: How do or will you make money? How much could you make? (We realize you can’t know precisely, but give your best estimate)

Tips:

  • Break down with numbers.
  • If possible, indicate a revenue goal are revenue per user, number of users, and timeframe (i.e. we expect to make $2500 per user/ year with a minimum of 2 million users in the next 10 years). Translation to YC: In 5 years we plan to make $5 billion in revenue.

OTHERS

Q: Please tell us something surprising or amusing that one of you has discovered.

Tips:

  • This is a great opportunity to share market specific learnings you’ve gained (perhaps the hard way) that have informed your product/company.

Q: Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.

Tips:

  • Pick an impressive project(s). Results, impact, takeaways etc that show how your team, expertise, market understanding and background are fit to build your business

Misconceptions Africans have about YC

“I don’t think YC will get my African market.”

Perhaps YC Partners won’t know the nuances of your market, but business is business everywhere. YC has funded over 2,100 companies and seen over 10,000 applications. Chances are they can understand the tenets of your business. It’s your job to explain your core problem, technology, market, traction, team, and unique insights. This is fundamental regardless of region. Simplify the complexity of your market and technology. Make it easy for a reviewer to repeat to someone else. Get to the point and storytell with numbers and traction.

“I don’t think my business is what they’re looking for.”

That’s what Kathryn Minshew, cofounder of the Muse, thought when they applied. Yet, YC accepted them, they’ve raised millions of dollars, and they’ve built a tremendous platform for career professionals. YC invests in ideas, 20M revenue businesses, cleanmeat technologies, fintech solutions and much more. Shoot your shot and apply! Here’s a list of ideas YC specifically requests. Don’t worry if your company doesn’t fit this list. Many companies get accepted outside of this list.

 

“They’re not looking for someone like me. I always thought YC was for young white male engineers building complicated tech.”

Not true. YC is committed to investing in outliers (ideas most people would think are crazy) and diverse companies. Now is a good time to apply as an African because you can present a unique market and evolve the global image of billion dollar business leaders. You got this!

 

“I’d have to relocate to Silicon Valley for 3 months? What about my family? I have children.”

While we won’t tell you how to raise your family, we do encourage you to explore the 3 months away. Look at it as a rare opportunity to gain lifetime access to world class founders, investors, networks, and global technologies. If you get in, the long term gains are win-win. 3 months will be a negligible trade off to building Africa’s future. We imagine your family and your continent will be proud of that. 

 

“I don’t feel like my ______ is good enough.”

As Africans, we often doubt whether we’re good enough or worthy of what we want/where we want to be. It’s especially hard if we don’t know or see anyone who’s done it before. In general, we don’t have many role models who’ve come before us to pave the way. As such, we feel crazy, guilty, or like frauds. It’s called imposter syndrome. Don’t let it sabotage your potential. If not you, then who?

Candidly, there’s no time for modesty. Africa’s future needs you. You deserve to apply just like anyone else. You’ve worked hard to get here. Show it.

Look at any measure of insights or progress in your company and include it in your application (i.e. X new users/ Y new contracts/ V feature tests in Z months). This adds up to traction, expertise, and a competitive advantage that YC partners want to see.

If you’re still having trouble, ask your team to list all of the traction they’ve made in the last 6 months. Review and pick the most impressive marks for your application. Frame these marks to show what you’ve accomplished and how continued progress can lead to a billion dollar opportunity. Also, tie in how this traction and your knowledge reflect why/how you’re the best team to build this business.

 

“We’re not ready yet. We haven’t ______ yet.”

You don’t have to be perfect. Apply anyway. Shola Akinlade of Paystack applied as a solo founder with only $200 in revenue. No progress is too small. Anything is better than nothing. 

 

“I don’t know if I have a billion dollar revenue business”

No one does early on. For starters, let’s do simple math. Think for a moment about your revenue per user/customer per month. Let’s say it’s $100/mo ($1200/yr). How many users/customers can your technology and team scale to in the next 10 years. Let’s say 500,000. That means $100/mo X 12 mos X 500,000 customers X 10 years = $6B! You’ve got a unicorn on your hands. Share these numbers early in your application (definitely in the video!) so YC Partners see the opportunity quickly.

 

“I worry about getting an unfavorable valuation.” 

Your valuation is largely in your control. But, one step at a time. Fill the application, get accepted, and then we’re happy to prep you for valuation conversations.


Other Useful Resources: