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Running The Numbers on Y Combinator’s Best Year Yet

This has been by far the best year yet for Y Combinator, with two of its biggest portfolio companies debuting on the public markets and the largest acquisition ever of one of its alumni. This also marks the beginning of a new era for YC that could see twice as many of its alumni on the public markets by the end of 2021.

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This has been by far the best year yet for Y Combinator, the prestigious Silicon Valley startup accelerator, with two of its biggest portfolio companies debuting on the public markets and the largest acquisition ever of one of its alumni.

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This year also marks the beginning of a new era for YC, as the program is commonly known, that could see twice as many of its alumni on the public markets by the end of 2021.

Airbnb’s $47 billion debut on the Nasdaq last week in particular is a high-water mark for YC, with a portfolio company that became one of the world’s most recognized internet brands going public.

Y Combinator first invested in Airbnb more than a decade ago as part of its winter 2009 class, a cohort of fewer than 20 companies. Then, it provided $20,000 in exchange for a 6 percent stake in Airbnb in the aftermath of the 2008 financial crisis. Airbnb’s last private valuation was $18 billion in April 2020, down from its 2017 valuation of $30 billion due to the pandemic curtailing travel, but the startup rebounded and went on to close its first day of trading with a market capitalization of $100 billion.

Just 24 hours before Airbnb went public, another Y Combinator company, DoorDash, debuted on the New York Stock Exchange at a $39 billion valuation—marking the first-ever exit of more than $10 billion for a YC company. Y Combinator invested in DoorDash more than seven years ago as one of 52 companies in its summer 2013 class. DoorDash’s last private valuation was $16 billion as of June 2020.

Heavy hitters

Both of the public-market debuts have since soared: Shares of Airbnb were up more than 100 percent and DoorDash more than 70 percent from their IPO prices as of Friday. The two leading consumer brands also far surpass previous billion-dollar IPOs for YC companies Dropbox and PagerDuty.

Acquisition record

This year has also been notable for YC on the M&A front, with the largest acquisition ever of one of its portfolio companies in October. That’s when Segment, a customer data infrastructure provider and a startup from YC’s summer 2011 cohort, was acquired by Twilio for $3.2 billion.

The deal tops two previous record-setting $1 billion YC portfolio company acquisitions: The purchase of self-driving technology company Cruise (winter 2014) by General Motors in 2016, and that of gaming streaming service Twitch (winter 2007) by Amazon in 2014.

YC ownership percentage

How much Y Combinator makes from these exits is anyone’s guess, but Crunchbase News has undertaken some calculations we think provide insight into YC ownership percentages over time. We also spoke with Y Combinator President Geoff Ralston, though he neither confirmed nor denied our calculations.

We know from the S-1 registration statements that Y Combinator owns less than 5 percent in each of those four portfolio companies that have gone public.

We also went through the exercise of charting YC ownership of both Airbnb and DoorDash through subsequent rounds. For Doordash and Airbnb, a 1 percent ownership stake nets around $400 million or greater. We believe the amount YC actually nets will be less, as this calculation does not include dilution for employee option pools, and makes certain assumptions about ownership percentages through the rounds.1

What is interesting from these calculations is that dilution is more dramatic in the earlier rounds—as new ownership percentages lessen in the later rounds—and YC gives up less equity.

The YC deal

Entrepreneurs participate in YC “to join our network, our community, because of the advice we give, because we improve their probability of success,” Ralston said. “And so the quid pro quo isn’t like a normal venture capitalist, which is there’s a market for your company and you’re valued at this, and we’ll give you that. That’s not why you do YC.”

Y Combinator has invested in more than 2,500 companies since 2005 when the program launched with the initial eight companies each raising $11,000 with an added $3,000 per founder.

“In 2005 the first batch was eight. In 2011 our batches were 30, 40, 50, 60 (then) went up to 80, and it kind of blew our minds. We had to rethink how we were structured. And now our batch size is trending from 250 to 300 companies per batch,” Ralston said.

In 2011, Yuri Milner and SV Angel2 offered to invest a further $120,000 into each company. Over time, other investors joined Start Fund. This program ended in 2014.

In 2014, Sam Altman, YC’s president at the time, announced the accelerator’s new deal: $120,000 per startup in exchange for a 7 percent stake.

That amount increased in 2019 to $150,000, along with new terms: A 7 percent post-money stake to ensure YC’s stake is not diluted by subsequent unpriced seed rounds a company raises. At the priced seed or Series A, Y Combinator would be diluted both by the new investors, as well as options pools created for employees.

YC recently announced that in 2021 the amount it plans to invest will go down to $125,000 for the same 7 percent allowing them to fund 3,000 more companies.

Y Combinator has changed over the years in other ways as well. “We work with companies way more extensively than we used to,” Ralston said. “In 2011, we launched Startup School. We worked with 10,000 founders at a time. We launched a Series A program, which works with founders 18 to 36 months after the batch, and we’ve launched our growth program and our growth funds.”

The fund has also expanded internationally. Since the pandemic hit, “it is way easier for a company in Southeast Asia, for a company in India, to do YC now,” he said. Previously, YC would fly a company to Mountain View for a 10-minute interview.

“It’s actually super convenient for them to stay where their businesses are during YC and still get the advice,” Ralston said. “There’s no question that remote has been good for our ability to work with founders who are in place and running their businesses in place. I think you’ll see that as a secular change for YC.”

YC’s initial investments by year

To understand how much Y Combinator invests at the pre-seed stage, we charted initial investments in the summer and winter cohort by year. (This chart does not include investments the firm might have made to maintain its ownership at the first priced round, or the increased investment with LPs in 2011.)

M&A

There have been 301 acquisitions of Y Combinator companies, according to our analysis of Crunchbase data. Of these, 47 companies (16 percent) have disclosed their exit prices. It’s worth keeping in mind that there is a large count of missing exit prices and, among this 16 percent, the larger exits are the most likely to have price tags disclosed.

According to our analysis, 2020 has led YC M&A exits, with $4.2 billion in disclosed deals. The number of exits we recorded above $100 million totals 17 companies overall to date, with two at $1 billion or above.

Projected ownership

We calculated ownership since 2012, when exits started coming in for YC portfolio companies, assuming a 2, 3 or 4 percent ownership stake for M&A with disclosed amounts. The returns are compelling when looking at the amounts invested by YC, but the sums per annum were below $100 million until just this year.

When factoring in IPOs, the returns are substantial, though this depends again on ownership percentages. Still, even with an ownership stake of just 1 or 2 percent at an IPO price for DoorDash of $39 billion and Airbnb of $47 billion, YC’s returns mounted quickly in 2020.

2021 and beyond

Y Combinator has 29 more portfolio companies valued at or over $1 billion, per the Crunchbase unicorn board, with a further 11 emerging unicorns.

“I think we’ll probably be on track to double the number of YC public companies by the end of 2021 and not stop,” Ralston said. “Because like I said, the YC companies in the portfolio are coming into their fullness.”

Illustration: Dom Guzman

Airbnb’s $47 billion debut on the Nasdaq last week in particular is a high-water mark for YC, with a portfolio company that became one of the world’s most recognized internet brands going public.

Source: https://news.crunchbase.com/news/y-combinator-biggest-startups-gone-public-airbnb-doordash/

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Sweden’s Einride Raises $110M For Autonomous And Electric Freight

Electric and autonomous freight tech company Einride has raised $110 million in a Series B round, the company announced Thursday.

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Electric and autonomous freight tech company Einride has raised $110 million in a Series B round, the company announced Thursday.

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The Stockholm, Sweden-based company, which was founded in 2016, makes autonomous and electric freight trucks for the transportation of goods, as well as provides a freight mobility platform.

The company decided to focus on freight transportation for a few reasons. Freight lends itself well to autonomous transportation because it’s predictable, repetitive and generally happens outside of cities, CEO Robert Falck said in an interview. For the founding team, it was obvious that the transition to autonomous would happen first for freight transportation, Falck said.

“I think the most important part of that is there is a very clear business case for freight compared to taxi services, robotic taxis, things like that,” Falck said.

Freight transportation also contributes to global CO2 emissions, which makes it a prime candidate for electrification.

“We think electrification will be the big theme for the next 10 years or so,” Northzone General Partner Jessica Schultz said in an interview. “It’s more sustainable and cheaper.”

Electrification — and autonomous vehicles — are both big themes in the world of transportation, though much of the attention is given to passenger vehicles. But the company’s stance is that the freight transport industry could benefit more immediately from the trends.

“When it comes to freight, most contracts are for three to five years and it’s repetitive and predictable,” Falck said.

The new funding will be used to invest in the company’s technology, continue delivering to customers, grow revenue and expand internationally. Einride counts companies like Coca-Cola, Oatly and Electrolux among its customers.

Last year, the company doubled its team and plans to grow its revenue tenfold in the next year or so.

New investors Temasek, Soros Fund Management LLC, Northzone, Build Capital and Maersk Growth all participated in the round, as did existing investors EQT Ventures, Plum Alley, Norrsken VC, Ericsson, and NordicNinja VC.

The new round brings Einride’s total funding to $150 million. The company last raised money in October 2020, per Crunchbase data.

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

“I think the most important part of that is there is a very clear business case for freight compared to taxi services, robotic taxis, things like that,” Falck said.

Source: https://news.crunchbase.com/news/swedens-einride-raises-110m-for-autonomous-and-electric-freight/

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The Briefing: Wealthsimple Raises $610M, Path Robotics Scores $56M, And More

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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Wealthsimple pulls in $610M at $4B valuation

Toronto-based Wealthsimple, a provider of tools for managing one’s money and investment portfolio, reportedly raised $610 million in fresh funding at a valuation of around $4 billion.

Meritech and Greylock led the financing, which roughly doubled the company’s valuation since its last round in October. Previously, Wealthsimple had raised around $310 million in known funding, per Crunchbase data.

— Joanna Glasner

Funding rounds

Path Robotics lands $56M: Columbus, Ohio-based Path Robotics, a developer of autonomous welding robots, announced it has raised $56 million in a Series B funding round led by Addition. The company says its AI-enabled robotics product will self-adjust for each part it produces, filling demand in a field facing chronic labor shortages.

— Joanna Glasner

Health care

Bone Health Technologies inks $2.5M: San Francisco-based Bone Health Technologies closed on $2.5 million in an oversubscribed funding round led by Good Growth Capital. Bone Health is developing a new standard of care for treating both osteoporosis and osteopenia, the precursor to osteoporosis. The company was recently granted Breakthrough Device Designation by the U.S. Food and Drug Administration for OsteoBoost, its vibration belt designed for the prevention of osteoporosis. Studies show that one 30-minute treatment with OsteoBoost reduced bone loss activity in all study participants, according to the company.

— Christine Hall

M&A

Dell to sell Boomi for $4B: Dell struck a deal to sell its Boomi cloud computing business to private equity firms Francisco Partners and TPG in a transaction valued at around $4 billion. Berwyn, Pennsylvania-based Boomi makes software that helps applications communicate with each other.

— Joanna Glasner

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Source: https://news.crunchbase.com/news/briefing-5-3-21/

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The Briefing: Darktrace Soars In IPO, Mux Picks Up $105M, And More

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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Darktrace shares soar in London IPO

Shares of British cybersecurity company Darktrace surged in first-day trading in London Friday, with the stock up as much as 43 percent in initial trades.

The Cambridge, U.K.-based company priced shares for its offering before trading commenced at a valuation of around $2.4 billion.

Founded in 2013, Darktrace uses AI to detect and respond to threats in companies’ IT systems. Previously, the company raised at least $230.5 million in known funding, per Crunchbase data.

— Joanna Glasner

Funding rounds

Mux raises $105M for video streaming: Video platform Mux has raised a $105 million Series D, bringing its valuation above the $1 billion mark. Mux’s technology helps developers build live and and on-demand video streams, something that became more popular during the COVID-19 pandemic with many people staying home. The round, which was led by Coatue, brings Mux’s total funding to $175 million.

–Sophia Kunthara

PortalOne picks up $15M for hybrid gaming: PortalOne, a startup developing what it describes as “hybrid games,” combining gaming and TV, raised $15 million in a seed round backed by a long list of investors, including Founders Fund, Atari, Twitch co-founder Kevin Lin, and Coatue Mangement. Founded in 2018, the company, which operates offices in Oslo, is looking to popularize a new category of entertainment that mixes games with live shows that are embedded directly inside the games.

OnLume Surgical raises $7M Series A: Madison, Wisconsin-based OnLume Surgical, a medical device company developing novel imaging systems for use during surgery, announced the completion of its Series A funding to assist its plans for a commercial launch.

— Joanna Glasner

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Source: https://news.crunchbase.com/news/briefing-4-30-21/

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