At a lunchtime fireside chat on February 25, representatives from Y Combinator—a seed-stage accelerator and venture capital firm that has helped launch more than 2,000 companies—spoke with a large audience of Duke undergrads, grad students, post docs, faculty, and staff about what it takes to fund and scale a company.
Y Combinator Partner Kat Mañalac and Visiting Partner Uri Lopatin were introduced by Fioleda Kesseli, Executive Director of Engineering Entrepreneurship and Director of Operations for BRiDGE; the fireside chat and Y Combinator’s other activities at Duke were co-sponsored by Duke Engineering, MEDx, and Duke Innovation & Entrepreneurship (I&E).
Y Combinator was launched in 2005, its founders believing that “smart, hardworking people could make a greater impact starting their own companies than joining someone else’s,” said Mañalac.
Now, with alumni companies including Airbnb, Dropbox, Reddit, Quora, Stripe, DoorDash, Coinbase, and Instacart, Y Combinator receives upwards of 16,000 applications per cycle, with two cycles per year. They interview around 1,000 companies in person at their California headquarters, and the ~250 accepted companies are funded the same day as their interview, with $150K provided over three months for 7% of the company. During those three months, companies spend one day a week at Y Combinator working directly with partners to start their company, find customers, raise funding, hire staff, track key metrics, and get to know other companies.
Historically, Y Combinator has been known primarily for its portfolio of software and tech companies. However, since investing in its first biotech company, Ginkgo Bioworks, in 2014, Y Combinator has funded more than 250 bio and life science companies currently valued at a total of $7B, and is rapidly becoming one of the largest seed stage biotech investors in the world.
This winter, Y Combinator embarked on its first-ever Bio Tour with the dual purpose of increasing awareness of its focus on the biotech and life sciences sectors, and also growing the funnel of potential Y Combinator companies. Duke was chosen as part of a selective roster of colleges for Y Combinator to tour, the list also including Stanford, Columbia, Cornell, and tech hubs in Boston and San Diego.
At the fireside chat, Lopatin (whose focus is on bio companies) and Mañalac (who works with companies on their media outreach) shared insights into Y Combinator’s approach, information about the process, and their tips for success.
According to Lopatin, Y Combinator believes the future of bio companies is for scientists to start their own companies—and much earlier in their careers than they previously would have—and to keep control of those companies. “We can teach an experienced scientist to be a business person much more easily than we can teach an experienced business person to be a brilliant scientist,” he said.
He also emphasized Y Combinator’s openness to funding all types of bio companies across any seed stage. “What type of bio companies do we fund? The answer is yes,” he quipped.
Mañalac, previously chief of staff to Reddit founder Alexis Ohanian, has seen 1300 companies go through the Y Combinator program. She recommended applying as early as possible, even if your company is “just an idea scrawled on the back of a napkin,” and emphasized that companies can reapply. “About 40% of the companies we fund have applied more than once,” she said.
Mañalac and Lopatin spent time answering wide-ranging audience questions—from the struggle for a physician to find a technical cofounder (answer: it’s hard); to whether you need a launched product to apply (answer: no, 60% of Y Combinator companies don’t); to whether you need a patent (“For bio companies, we expect you to have a path to exclusive licensing,” said Lopatin); to whether Y Combinator accepts companies competing in the same space (“We’ve funded probably 50 companies that help people find software engineers,” said Mañalac).
Above all, they emphasized the vast potential for bio companies to improve lives, an exciting prospect for investors. “When you’re trying to do something that changes the world, it’s pretty easy to get people excited about that,” said Lopatin.
Y Combinator accepts two batches of companies per year. The next application deadline is March 25, with the Summer 2020 batch running from June through August.
In addition to the lunchtime fireside chat, Y Combinator hosted a happy hour at Gonza Tacos y Tequila, where they spoke further with the Duke community, as well as office hours with select companies and founders, including Stefan Roberts (inSoma Bio), Kelli Luginbuhl (Isolere), and Alan Ma (CasTag).
The Duke Angel Network (DAN) and the Office of Licensing & Ventures worked with Y Combinator to identify promising companies to meet. Two Duke Angel Network portfolio companies have come out of Y Combinator—Embrace, cofounded by Eric Futoran E’99; and Superb AI, founded by Hyun Kim E’15.
“With Y Combinator’s growing interest in biotech and life sciences, it makes great sense for them to visit Duke and the Triangle,” said Kurt Schmidt, Managing Director of DAN. “This is Y Combinator’s second visit to Duke, with some notable YC portfolio companies having been founded by Duke alumni.”
Among the Duke alumni who have founded and taken their companies through Y Combinator are:
- Fred Ehrsam T’10 cofounded Coinbase and took it through Y Combinator; he later founded Paradigm.
- Howie Liu E’09 went through Y Combinator in 2010 with Etacts, a CRM tool, and sold it to Salesforce the same year. He’s now CEO of Airtable, a company that makes cloud collaboration databases.
- Andrew Dietrich, MBA’12, MEM’12, took his company Final through Y Combinator; the company was later acquired by Goldman Sachs.
- Kevin Lacker T’02 founded Parse, a Y Combinator company later acquired by Facebook.