Its quite possible that even YC would miss a few good founders. One that I came across recently was veed.io. They have raised 35 million in funding from Sequoia. What other startups that YC rejected went on to do well?
SendGrid (acquired by Twilio for $2B [1]) famously had their application rejected, and their later success caused YC to update its selection process.
From this Quora answer [2]:
> Apparently, only one partner, Robert Morris, reviewed the SendGrid application, and he gave it a highly negative score, calling it a "spam company." That pushed it so far down the application queue that no other partner reviewed it. Paul talks about how they changed the application process after that so that any applications negatively scored by Robert would also get reviewed by Paul.
(Interestingly, venture returns skew so highly to big winners that SendGrid's objectively huge outcome would not even have had a material impact on YC's current portfolio value of nearly $1T [3]. I'm not aware of any current $10B+ companies that were rejected by YC, though there may be some.)
I don't think you mean portfolio value. That would mean YC actually owns $1T in the companies they funded, at their current valuation.
The following on YC front page is more meaningful:
"Our companies have a combined valuation nearing $1T."
Yes, the combined valuation number you cited is the one I was referring to. You're right that it's not correct to call this "portfolio value"; thanks for pointing out the mistake. (But it is still the correct number to compare SendGrid's $2B exit value to.)
Notably, SendGrid went through the Techstars accelerator instead. One of their mentors from the Techstars program [1], Jim Franklin, later became SendGrid's CEO and helped the technical founders grow the company towards the success they eventually achieved.
I don't know or care about spam, but SendGrid is one of the most prolific sources of malware and phishing emails out there. Their opaquely rewritten URLs are an annoyance to security teams everywhere, enough that I've seen enterprises simply block ct.sendgrid.net or any URL with /ls/click, which isn't the kind of thing large companies typically have the will to do.
I work with phishing emails, I love sendgrid, your sandbox sucks if you are not detonating URLs to see where they lead to and rewriting means as soon as sendgrid finds out about an account sending spam/phishing they can disable all those links which isn't doable when they are doing the same thing with multiple domains, urls, subject lines, attachment names,etc... leaving you with live phishing links you don't know about in someone's inbox.
Any modern paid email protection service will also work nicely with sendgrid and the like.
You worked at orgs that didn't have the best decision making if they are blocking sendgrid. Talk about throwing the baby with the bathwater. Lazy mitigations made bad security. This is especially true here since sendgrid is hardly the only one of their kind so you will play whackamole blocking all kinds of legit services because... you don't have toolimg that can follow 301's??
As a bit of anecdata, I received a spam message from SendGrid about 3 weeks ago (while just a few spam messages per year make it through), and that's how I've learned about them. But I guess they won't stay out of DNSBLs for long if the portion of spam messages will be particularly high.
Sendgrid seems to be used as the infrastructure to send emails from a lot of the email service providers I use. They are not spam companies and react to customers who get marked as spam by suspending accounts and doing reviews.
I'm going to guess Sendgrid themselves also look for high ratios of spam reports and do the same.
It is the default service used to manage and send transactional emails out of most Magento instances. It’s basically used like new relic for eCommerce comms. And extra layer of logs/detail/visibility on top of mail logs and a, “baby’s first” EMS/CDP
The most amazing thing about this story is that Robert Morris, of all people, was the one who dismissed it as a spam company. Ironic, hilarious, something like that…
I co-founded Fold [0], which went on to raise a $13M Series A from Craft and has some pretty incredible numbers. We were rejected a few times, one after a pretty spicy in-person interview where one of the partners told me to "have fun in jail" because we dared to mess with Bitcoin while the US regulatory system worked itself out.
The parent company became Thesis, a venture studio where we raised a $21M Series A, and have incubated a few more projects (Keep, tBTC, Saddle, Tally).
A friend's company, Wyre, was rejected. They ended up being acquired for 1.5B [1].
It would've been nice to do YC in 2013/14. From what I've heard from other founders, I'm not sure the value today is nearly so high.
Wyre got acquired for 1.5B by Bolt? Wasn't Bolt doing heavy layoffs and downsizing after it was revealed literally nobody used their payments system, and they locked their employees in predatory loans?
How much of that 1.5B was real money, and how much was soon-to-be worthless stock?
That seems unlikely. Startup acquiring another startup is rarely all cash deal.
Also according to CrunchBase Bolt has raised about $970 million in total. Their revenue is at somewhere around $20-50 million, so they wouldn't even had the cash. Also seems unlikely they would have taken or gotten a massive loan to do an all-cash acquisition like that
When you say they “missed” crypto, has crypto actually become something legit yet, apart from a vehicle for wild speculation, hype, and what feels in many situations like get rich quick or ponzi schemes?
Genuine question (based on what my perception has been, it’s mostly been FOMO investing, but maybe I’m just missing something?)
My guess is that a bunch of startups that have gone on to do well and were rejected aren't broadcasting that around. Too many other priorities to deal with when things are succeeding and no reason to create any negative feelings about being rejected by YC.
Just think about this. Every successful startup was rejected by some VC. It is par for the course and not really a big deal if you are winning.
I think it's useful to hear the stories. When you're a 1-3 person startup early stage rejection is harder to get over, and it helps to know others have succeeded regardless.
YC reject here. Created a B2C company doing 5M/month revenue in 4 years. Exited. Applied with second company to YC (B2B), rejected again. Hoping to grow it bigger than last time.
Were you not from the states? Are you a solo founder? Are you not "politically" aligned with California? I'm just wondering how can they reject someone of this calibre. Even if your application was different to your eventual success, a mantra is "we invest in people, not ideas".
Hi, I’m also really interested in scalable projects that are focused on environmental and social amelioration. Please email me (in profile) if you’d like to connect.
Separately: I'm not saying this to denigrate YC or anything; they get thousands of (at least moderately) serious applications and probably 10x that that are nonsense, but the interview we got had interviewers that seemed pretty unfamiliar with the sales processes of b2b companies that sell to midmarket or enterprise. I assume the people who did the 10 minutes with us were luck of the draw. And major props for promptly responding and saying no thanks; lots of vcs we talked to fucked around with responses and/or two even ghosted us.
So, YC for dev tools or b2c stuff? Probably great. YC for sales enablement or tooling for midmarket or enterprise sales teams? It may be very hit or miss. (Just like any vc.)
You really don't need YC rejects to validate that being rejected by YC isn't a death sentence. 90% of all startups that are successful have done it without YC. Many have done it without any VC.
In my founder "generation" at least, many of us got excited and felt heard reading PG's old blog posts. A YC rejection can feel more personal when you've lionized them for years.
You can tell that being rejected by YC isn't that strong indicator for success given the number of YC startups who have been public about having only got into YC in their third or even fourth attempt. In my book that is equivalent to being rejected, and YC only accepted them after they basically made it.
YC is also very public that a significant number of every batch have been rejected a couple of times. So basically being rejected by YC is not even a strong indicator that you won't be a YC success.
Yeah I don’t see the point in applying anymore (I’ve applied twice). Why bother?
I found a bunch of “first check” VCs but out of the ~30 I contacted, only 4 responded with some level of, “Ahh, that market hasn’t been proven but keep in touch!”
With YC it’s, “You didn’t get selected but keep trying!”
The only need I have for VC money is freedom to work on my ideas full-time and continue to feed my family. I guess I’ll keep bootstrapping.
A close friend once told me, “Rejection is protection and redirection.” (:
Sure! It's actually two businesses but they work in tandem; a registry (Neuenet) and a registrar (beachfront) on the Handshake blockchain/protocol (a decentralized alt-root…I know, bear with me). When the software I'm building is solid in production, it will be open-sourced (alongside a hosted service).
As an example, let's say you owned the Handshake TLD .testmasterflex…you'd be able to create SLDs (domains) and manage everything quite easily with my software. Currently, Handshake is in its second year and the ecosystem is quite barren so it's not friendly for non-devs. I have ~1k TLDs and setup websites secured with DANE and DNSSEC for ~900 of them. It was tedious, to say the least.
You may be thinking, “Okay, but hasn’t this been tried before? What makes Handshake so different?”
What I’ve gathered is, while alt‑roots have come and gone over time, Handshake came along at a great time; with a bunch of investment and an incentivized rollout to get developers interested in building upon it…and it’s working.
We’ve got ICANN‑accredited registrars like Porkbun, Encirca, and Namecheap selling Handshake domains. Namecheap even owns a handful of Handshake TLDs! The parent company of Porkbun, Top Level Design, operates .gay and .wiki on the ICANN side and claimed those names on Handshake. On top of that, we’ve got plenty of Handshake resolvers for your OS/platform of choice: macOS, Linux, Windows, iOS, Android, whatever. If that’s not support, I don’t know what is.
Anyhoo, lemme get off my soapbox to share some links.
No offense but after reading this I have no idea what your business is or why I'd want to use it and I reckon >90% of tech people reading this won't either.
No worries! The simplest example I could give is I'm building a Verisign and GoDaddy on crypto. Most people don't know who Verisign is either, nor do they need to.
People don't care about blockchains for the sake of decentralization or whatever, they'll care if they can build cool shit on it easily though. It'll be easier to show when I'm ready to launch.
Bingo, and when someone with Handshake TLDs wants to do the same but would rather not get a VPS, setup databases, &c.
Initially, I expect volume to modest. The Handshake community will be the early adopters/speculators. Once the registrar gains features like a website builder and one-click install integrations (Wordpress, Gatsby, whatever), I'm going to reach out to creatives I admire to see what they can do.
I don't expect to set the world on fire or make millions within some short timeframe. My main goal is to empower people to build dope shit they wouldn't otherwise be able to build on traditional domains.
> YC only accepted them after they basically made it
Everytime I watch dragons den I get the same feeling. You have $1m in orders this year, which should be a profit of 200k, sure I will give you 100k for 20% of your company.
> ...the business required a degree of enterprise sales that my skills weren't suited for.
10mins isn't enough time and their judgement is likely to be off (it is also mostly also down to the interviewee / founders to sell themselves in whatever time they have). I've heard this similar "no skill" story before from another start-up (which isn't doing as good... yet).
Came here to point this out. I've seen many cash flow positive strong businesses end up in the hands of VCs by raising money. Remember that when you raise money and you don't hit "KPI" or any goalpost that can be manipulated and moved, you are gambling.
In the age of cheap capital, this might have been an attainable goal: Raise money, pump valuation and dump on retail. If not, get acquired by another startup unicorn. That is no longer the case. Many startups are going to run out of capital and not only is IPO out of the picture in 2023 and beyond, the "failacquired" is just going to be straight up "shut down" when they can't find buyers.
I saw this happening heading towards 2018 briefly and I am seeing even more number of desperate startup founders who turned their cash positive business into a cash negative by raising money.
It always puzzled me why startups were being told to lose money to grow quickly and its made me uneasy knowing that when the tide goes out, it does so rapidly.
In the last 2-3 years, it certainly seems to now equal “success”.
Founders at least are offloading so much equity in every round that every raise essentially becomes an “exit”.
I’m very surprised by this change. When I first started in this world, it wad drilled into my head that founder equity must be controlled at all costs. But now, the prevailing wisdom seems to be to sell off as much as you can with every round.
Basically we are at the Ponzi finance stage and approaching a Minsky moment. By participating in this destructive greed driven financial system, nothing new is created, the world isn't any better.
It will take some time but there's a side of this coin that nobody with money likes to talk about, its the slow realization that your material attainment creates a cycle of apathy and that you have an impact on the world that you've squandered ultimately in the vain chase of exuberance. You try to get over this feeling of emptiness by doing a variety of things but because you are so comfortable you can't find a way to undo it. Many fall into addictions, sex, drugs, purchases but its fleeting and you hit a wall. With all the money and comforts in the world an outsider would be puzzled but this is the burden of haves. While it isn't quite the same as have nots, its of the same pedigree.
Everybody chases what everybody else is chasing without realizing what it is they are chasing. This is the type of conversations we avoid. We don't stop, pause, and collective question what we do is correct. No there's no trickle down effect either. It's the other way around and I've seen many successful people destroy their lives once they let wealth get to their heads.
I attended the talk. The founder said they'll grow organically and won't need any VC money. I can't find the sections are not in the youtube video (missing minutes?). So I'm interested why the founder changed his opinion.
Ah, so they raised money for more stability for their growing team and so they won't have to focus so much on revenue. Seems like Sequoia's a great fit for them.
The way they broke down the traditional venture path with YC was eye-opening. Lots of divvying up the pie.
Fairly sure that Notion and Roam are both YC rejections. While Roam isn't quite at the same level, Notion is a healthy business at venture scale, a meaningful miss to the YC portfolio.
i don’t personally have anything in writing, but i had lunch with the notion founders in 2019 and they mentioned they got rejected by YC when notion was “more of a research tool”
From this Quora answer [2]:
> Apparently, only one partner, Robert Morris, reviewed the SendGrid application, and he gave it a highly negative score, calling it a "spam company." That pushed it so far down the application queue that no other partner reviewed it. Paul talks about how they changed the application process after that so that any applications negatively scored by Robert would also get reviewed by Paul.
(Interestingly, venture returns skew so highly to big winners that SendGrid's objectively huge outcome would not even have had a material impact on YC's current portfolio value of nearly $1T [3]. I'm not aware of any current $10B+ companies that were rejected by YC, though there may be some.)
[1] https://www.zdnet.com/article/twilio-to-acquire-email-api-pl...
[2] https://www.quora.com/Why-was-SendGrid-rejected-from-YCombin...
[3] https://www.ycombinator.com/