3 Reasons Why Y Combinator Is Worth 10% Equity

I’ve read a lot of posts recently questioning whether Y Combinator is worth it, claiming:

• “They take too much equity”
• “It’s overhyped”
• “You don’t need it to build a successful startup”

As someone who’s gone through YC twice – first with AXDRAFT and second with AiSDR – I have a different perspective to share.

The question of whether YC is worth 10% of your company is theoretical for me.

I’ve lived it. I’ve experienced both building a startup with and without YC’s backing. And I can tell you that YC is a game-changer for your startup.

Pulling from my experiences, here are 3 reasons why.

TLDR

• The goal: Build a successful startup
• The tactic: Take part in Y Combinator (even if it means providing ~10% equity)
• The result: Gain access to greater fundraising power, networking, and support

Reason #1: Greater fundraising power

YC dramatically moves the goalposts when it comes to raising money.

Before my first time in YC in the W2019 batch, I was grinding it out in Europe. 

I talked to dozens of European VCs, and after 3 months, 2 of them were willing to offer term sheets – $500K at a $1.5M pre-money valuation.

Even then, this was with the caveat that due diligence was satisfactory.

But before we accepted any term sheets, we were accepted into YC.

Fast forward, and in the 3 weeks after demo day, we raised $1.5M on a $10M post-money valuation for AXDRAFT.

Let that sink in. 

We raised 3x more money. At a significantly higher valuation. Nearly 7x faster than my previous fundraising attempts.

And it’s not just me. I’ve seen this happen time and again with other YC companies, whether they were in my batch or later.

YC status just changes how investors see you. You’re no longer just another startup founder. Rather, YC opens doors to investment opportunities that would have otherwise remained shut.

Reason #2: High-value network & partnership opportunities

The network you get at YC is absolutely unmatched.

Here’s a real example from my batch.

One of my batchmates was Alex Bouaziz. We were in the same office hours every two weeks, struggling, building, and growing together.

It’s wild to think about now, but back then, Deel’s monthly revenue was lower than ours at AXDRAFT. Jump to today, and they’re crushing it with over $500M in annual recurring revenue.

That’s the caliber of founders you get to build relationships with at YC.

But it’s not just about the other founders.

Being a YC company helped us meet with enterprise customers like Twitter and Slack, even though we were just a 5-person team at the time.

Think about it. It’s not every day that a 5-person startup closes a deal with Slack. It doesn’t happen without the YC name behind you.

This is what I mean when I say YC’s network is built different. 

You’re not just getting casual intros or LinkedIn connections. You get relationships with founders working on massive companies and decision-makers at enterprises who wouldn’t normally meet with you.

Reason #3: Ongoing support

YC’s support isn’t just about the 3 months you’re in the program.

They’re there for you every step of the way.

When we were selling AXDRAFT, we hit a rough patch during the negotiations when the buyer’s lawyers had a few unreasonable demands regarding liability.

I tried to push back, but the discussion wasn’t going anywhere.

That’s when I reached out to YC.

Here’s what happened next: Since YC was one of our largest shareholders, YC’s lawyer joined the next call. The moment YC’s lawyer pushed back on the problematic terms, the buyer compromised and we were able to close the deal.

Why?

Nobody wants to mess with YC. Which makes having them in your corner invaluable when things get tough.

But it’s not just about big moments like acquisitions. 

As a YC founder, you can hop on a call with someone you’ve never met before, a partner who can give advice, or an advisor who can be a sounding board for the issues you’re facing.

Chances are, no matter what problem you’re tackling, YC partners have seen it, and they’re ready to help.

Result

The fundraising power. The networking opportunities. The ongoing support.

All of this was so valuable that when I started AiSDR, I knew I wanted to go through YC again. I wanted them as a partner on this new journey.

I’ve seen firsthand how YC helps transform good companies into great ones.

Some might look at the 10% equity and hesitate, but having been through YC twice, I can tell you with complete conviction that the 10% you give might be the best deal you make as a founder.