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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.



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.)


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.




The Briefing: Hailo Lands $136M Series C

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



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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Hailo lands $136M for AI chips

Tel Aviv-based Hailo, a startup developing AI accelerator chips for edge devices, announced that it raised $136 million in a Series C funding round led by Poalim and entrepreneur Gil Agmon. The round brings Hailo’s total funding to $224 million.

— Joanna Glasner

SupportLogic raises $50M Series B

San Jose -based SupportLogic closed a $50 million Series B funding round led by WestBridge Capital Partners and General Catalyst. Existing investors Sierra Ventures and Emergent Ventures also participated in the round.

SupportLogic’s AI-based platform allows businesses to act on customer communications in real-time in order to offer better customer service and support.

Founded in 2016, the company has raised approximately $62 million to date, according to Crunchbase data.

— Chris Metinko


GitLab raises IPO range: San Francisco-based GitLab, a provider of development and collaboration tools for programmers, raised the proposed share price range for its upcoming IPO. The company now plans to raise around $700 million by offering 10.4 million shares at a price range of $66 to $69, up from the prior range of $55 to $60.

— Joanna Glasner

Illustration: Dom Guzman

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

— Joanna Glasner



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Square Rolls Up Afterpay As BNPL Market Stays Hot

Payments platform Square plans to buy Afterpay, an Australian buy now, pay later service, in an all-stock deal valued at around $29 billion.



Payments platform Square plans to buy Afterpay, an Australian buy now, pay later service, in an all-stock deal valued at around $29 billion.

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Melbourne-based Afterpay is publicly traded on Australia’s ASX exchange. It currently counts more than 16 million consumers and nearly 100,000 merchants globally as users of its platform, including major retailers across fashion, homewares, beauty, sporting goods and other categories. The company, backed by investors including Tencent and Coatue, has raised just under $449 million in funding, per Crunchbase data.

Afterpay competes in the increasingly crowded buy now, pay later space, which allows consumers to break up online purchases into smaller payments. Its biggest competitors include Stockholm-based Klarna, which has raised $3.7 billion from private investors to date, and Affirm, which raised $1.5 billion in venture funding before going public in January. Affirm’s share price has since plummeted to less than half of its 52-week high in February, but jumped 14 percent in morning trading on Monday after the Afterpay acquisition was announced.

Another major player in the BNPL space includes fintech giant PayPal, which in 2008 purchased Bill Me Later, an early pioneer in the space.

All told, venture investors poured $1.7 billion into buy now, pay later companies between 2016 and 2020, per Crunchbase data. A Bank of America survey late last year predicted the BNPL market was poised to “grow 10-15 times by 2025 to eventually process between $650 billion and $1 trillion in transactions.”

Venture investors like the BNPL business model because these startups essentially have two revenue streams, Kamran Ansari, a venture partner at Greycroft, which invested in e-commerce pay-over-time financing tool Credit Key, told Crunchbase News earlier this year.

The first revenue source is the actual transaction, when the merchant typically pays between 2 and 3 percent of the purchase price to the BNPL service in exchange for being able to offer that convenience to its customers. The second revenue stream for the BNPL service is interest payments from borrowers.

Square’s shares have surged 105 percent over the past year amid a boom for digital transactions such as its mobile Cash App. It also reported second-quarter earnings on Sunday, revealing that revenue had more than doubled from the same quarter the previous year, to $4.7 billion.

San Francisco-based Square said it plans to integrate Afterpay into its Cash App and seller ecosystem.

“By combining with Square, we will further accelerate our growth in the U.S. and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers, Afterpay co-founders and co-CEOs Anthony Eisen and Nick Molnar said in a statement announcing the deal.

Illustration: Li-Anne Dias.

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

Another major player in the BNPL space includes fintech giant PayPal, which in 2008 purchased Bill Me Later, an early pioneer in the space.



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Cryptocurrency Experts Say These 4 Factors Are Driving Change In The Industry

The COVID-19



The COVID-19 pandemic accelerated acceptance of digital currencies like Bitcoin and the underlying blockchain technologies that power them. And while Bitcoin volatility continues — with the currency hitting its lowest point in months this week — investors are optimistic momentum will continue even as the world slowly starts to return to normal.

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The crypto and blockchain sector has attracted nearly $12.4 billion in venture investment into U.S.-based companies since 2017 and $19.4 billion globally, Crunchbase numbers show. In fact, data so far for 2021 shows dollars were nearly 3x from 2020 for both global and U.S. investments. But the sector also faces continued opportunities and challenges going forward, including more widespread adoption and new regulatory pressures from governments around the world.

Case in point: Earlier this month, El Salvador became the world’s first country to adopt bitcoin as legal tender. At the same time, Thailand’s Securities and Exchange Commission ordered its exchanges to delist meme coins, such as Dogecoin, as well as NFTs, exchange tokens and fan tokens, saying those tokens have “no clear objective or substance or underlying [value].”

Stepped-up efforts by China’s government to rein in the crypto space had the largest impact on valuations. On Friday, authorities in China’s Sichuan province, one of the country’s largest mining centers, reportedly ordered cryptocurrency miners to shut down their operations,

Cryptocurrency experts say these kinds of polarizing events put a spotlight on the space.

“Blockchain was accelerated five years in the pandemic,” according to Alon Goren, founding partner at blockchain fintech venture studio Draper Goren Holm.

Here’s a closer look at four factors that are likely to drive big changes in the cryptocurrency space in years to come.

1) Mainstream adoption

Cryptocurrency startups are working to make the process of using, buying, trading and finding digital currencies easier, driving greater consumer awareness and adoption.

Increasingly, mainstream adoption of cryptocurrencies is “crazy important” to the growth of the sector, according to Goren. Still, some of that adoption has come from less serious applications of digital currencies, including “meme coins” — assets based on jokes but with no real value other than those given to them by social indicators — a phenomenon that also concerns Goren because they reinforce the notion that cryptocurrency isn’t legitimate.

“Publicly traded companies can show quarterly earnings, you can follow the CEO on Twitter and you know their opinions on things,” Goren added. “In crypto, you don’t have those kinds of things to show legitimacy.”

Meanwhile, Hsuan Lee, CEO of Portto/Blocto, said the adoption of NFTs — non-fungible tokens — is one of the biggest factors that has changed the industry in the past year. Portto is a Taiwan-based company that aims to make blockchain simple for users and developers.

Although NFTs have been around since 2017, they were initially not appealing for typical use, but that all changed when they became approachable by retail investors, including when sports organizations got involved in selling digital clips and cards, he said.

“The National Basketball Association doesn’t market itself as a blockchain, but offering collectibles on it appeals to fans,” Lee said in an interview. “With those kinds of applications, even introducing a music NFT would potentially attract existing music fans. With that kind of people joining the party, it will make crypto more mainstream.”

Muneeb Jan, a cryptocurrency and fintech expert operating out of Hong Kong, said the investor base for cryptocurrency is still largely retail investors, while major financial institutions are in the discovery phase.

Still, new companies are announcing on a daily basis that they will accept bitcoin and other cryptocurrencies, and banks are facing crypto investor demand to get more involved in the space, Jan said.

“Crypto funds are increasingly viewed as an asset class,” he said in an interview. “There is not much of a use case currently, but they want to jump onto the bandwagon. If more large institutional investors come in, there will be price stability, and it will improve the legitimacy.”

2) Price volatility

Jan believes two of the biggest headwinds slowing more mainstream cryptocurrency adoption are price volatility and the fact that bitcoin as a mode of payment is not yet completely viable due the current inability to quickly process transactions.

Bitcoin has been particularly volatile in recent days. After surging above $40,000 about a week ago, the currency fell below $30,000 this week, recovering to around $32,400 as of Tuesday afternoon. Over the past year, the price grew to a peak of more than $60,000 before falling back to half that at the end of May.

Just processing transactions is not a sustainable use long-term due to the expensive transaction fees associated with it, even though people want bitcoin to be able to do that, he added.

“Other cryptocurrencies are not volatile because the community investing in them have come to a consensus on the price,” Jan said.

Lee said price volatility will be aided by regulations, especially as cryptocurrency is adopted more broadly. Price volatility will only be fixed with time, he said.

“This is a very young market and it has attracted attention, which makes prices volatile,” he added. “It can be dangerous to get into a space without established regulations. Being at an early stage, there is a lot of imagination that can be had for these cryptocurrencies. At the same time, when bad news comes out, it can easily dump harder on crypto than other companies.”

3) Regulatory pressure

Regulations proposed for cryptocurrency have gained steam since the beginning of 2021.

Among them: The U.S. Department of the Treasury announced in May that it will require any transfer worth $10,000 or more to be reported to the Internal Revenue Service as part of an effort to curb tax evasion.

“I’m happy to see regulations come into place because it will be good for the industry overall,” Lee said. “It will minimize possible scams or malicious use cases and make it better for everyone to get on board.”

The government is also examining possible regulations of cryptocurrency exchanges with a focus on protecting investors and preventing market manipulation, as well as financial account reporting as it relates to cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies.

Goren called a focus on Bitcoin, Etherium and the public markets “a double-edged sword.” Any real value is eroded when inflation occurs, but Bitcoin is a decentralized currency, so its value holds up well against inflation.

And the more institutions that participate, the more legitimacy it creates so regulators are less likely to fight it, he said.

“Most lawmakers know crypto is not used by criminals, but the people who put them in office are large financial institutions that are cheering when they say that happens,” Goren said.

While he understands why there have to be IRS reporting requirements for tax purposes, he disagrees when government regulations don’t consider Bitcoin a currency, but then treats it like cash.

By instead treating cryptocurrency as a capital asset, the IRS is taxing capital gains, which could also have implications on the venture capital world, he added.

Goren said other countries have a bit more clarity, but there is still misunderstanding in the U.S. when it comes to how cryptocurrencies should be reported financially, and it won’t change until there is clear categorization of cryptocurrencies.

4) Beyond Bitcoin

Rocketfuel Blockchain founder Peter Jensen said it will take time for the public to understand and be comfortable with cryptocurrency, much as people had to acclimate to the idea of online banking and ATM cards before that.

Jensen’s company, based in San Francisco, processes crypto payments. He believes people are distracted by the price volatility of Bitcoin, although it is just one out of some 200 cryptocurrencies.

“We need to move people’s minds away from Bitcoin because who knows if cryptocurrency will survive,” Jensen said in an interview. “There are many cryptocurrencies pegged to the dollar, which means they have zero volatility. If you take those and use them for payment, then you get the benefits of that.”

Global developments — such as El Salvador adopting cryptocurrency and both Sweden and Dubai issuing their own digital currencies — bring promise for the future of the industry, and Jensen predicts the U.S. will eventually issue a digital version of the dollar.

He sees a world where when you get a job, you will have the choice of receiving your paycheck in dollars or cryptocurrency, and there will be no volatility because those funds will be guaranteed by the U.S. government.

“We feel that the U.S. has an opportunity to be ahead, even though China is adopting cryptocurrency faster, as well as those with less-efficient banking systems,” Jensen added. “If we don’t stay in front, we are going to be last.”

Crunchbase Pro queries listed for this article

The query used for this article was “Global Cryptocurrency Companies,” in which “Bitcoin,” “cryptocurrency” and “virtual currency” were the organizational industry search terms. The data was then separated out by changing the headquarters location to “United States.”

All Crunchbase Pro Queries are dynamic with results updating over time. They can be adapted with any company or investor name for analysis.

Illustration: Dom Guzman

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

Stepped-up efforts by China’s government to rein in the crypto space had the largest impact on valuations. On Friday, authorities in China’s Sichuan province, one of the country’s largest mining centers, reportedly ordered cryptocurrency miners to shut down their operations,



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