November 8, 2019

Why are you applying to YC?

A bit of a controversial question - I agree.

But as an indie hacker, why are you applying for YC?

The end goal of YC is to raise a round of funding and get aboard the VC rocketship.

I am genuinely interested in the why.

I work in VC myself and organize Indie Hackers events so I have a view on both worlds. My worry is that most people have a misconception of what are the expectations of YC and just apply due to their brand.

Prove me wrong I guess?

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    The end goal of YC is to raise a round of funding and get aboard the VC rocketship.

    Can confirm this is true. Even if this isn't what you want to do, the YC partners will push you and persuade you to do it. And if they don't succeed, the pressure from your peers and the social norms of the YC community probably will.

    That said, I know quite a few YC companies who did raise that first seed round, built out a team, rushed to profitability, and completely stopped raising after that. (Zapier comes to mind.) It's not what investors want, ideally, but you're generally not giving away control of your company during a seed round, so they can't exactly stop you.

    Alternatively, TinySeed and Earnest Capital seem like much better choices if you want to raise money as an indie hacker, because they're a lot less likely to pressure you to keep raising and/or remain unprofitable.

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      I had an exchange with Tyler Tringas from Earnest Capital on that topic when he did his AMA here.

      https://www.indiehackers.com/post/hi-indie-hackers-im-tyler-tringas-i-m-currently-the-founder-of-earnestcapital-com-ask-me-anything-375de18c0d?commentId=-LqqHSVbNMApz7yr6r4U

      My point was:

      For instance, I constantly hear from some of our attendees that they applied (or plan to apply) to YC, yet they are all for indie hacking and bootstrapping.

      An indie founder that targets $10-100k MRR and a potential exit a $1-10M is nowhere near the expectations of YC. So why apply?

      Traditionally, raising VC money is a tool for when you believe there is a massive growth opportunity for your business and you want to go after it.

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    Ok I’ll bite.

    I don’t identify as an Indiehacker. The whole “as an Indiehacker...” makes no sense to me.

    Some people take this way too serious, as if “being and Indiehacker” comes with bylaws like “no pork, no alchohol”, thou shall not...

    Indiehackers is to me a nice forum for people to learn about starting a business by themselves. About supporting each other and shooting the breeze.

    So, long story short:

    Indiehack your way to a validated product. It’s by far the best way. Then look at what options you have. And what you want to do.

    VC funding is just an option for the next maturity level of your company.

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      True, but the indiehacker culture is one based on starting lifestyle businesses. This is impossible to do when you have millions of someone else's money looming over your head. They won't let you forget it either.

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        Totally. If you want to go "lifestyle" you should stay away from VC's as far as possible.

        The "indiehacker culture" — as far as you can call it that — is in my eyes just not that restrictive.

        It is the means to end.

        You can graduate, evolve (maybe devolve is some purists eyes) into a different business though.

        Much loved company Buffer took millions in VC funding, but they are prominently interviewed here in Indiehackers. Like many others...

        https://www.indiehackers.com/podcast/058-joel-gascoigne-of-buffer

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      Completely agreed with this.

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      I disagree.

      As far as I'm aware, IndieHacker is an abbreviation for "Independent Hacker" - you're not independent if you're beholden to board members and VC incentives.

      VC funding is an option for the next maturity level of your company but it's not the only option - there are many paths and frankly I think the risk-adjusted return of being an IndieHacker (especially if you include a utility function in the form of your own happiness) is much higher.

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        I think we completely agree. VC is just one option to maybe pursue. I literally said "VC funding is just an option..."

        Maybe we disagree on the hard dichotomy often spouted here of "VC === unhappiness" and "Independent Hacking === happiness". That's just way too black and white.

        The world is gray, your milage might vary, everyone is different etc. etc.

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          We agree about VC being one option of many.

          I disagree with your assertion that “indiehackers is a nice forum for people to learn about starting a business by themselves” - I maintain that being an indiehacker is about being independent which is generally at odds with raising money (I agree with Courtland that TinySeed and Earnest Capital seem like much better choices if you do want to raise money as an indie hacker because they’re less likely to pressure you to keep raising and take risks to grow massive that may cause you to fail to build a sustainable but less large business).

          Of course it’s too black and white to suggest that raising money implies unhappiness or being independent implies happiness - there are countless counterexamples on both sides. Your milage will vary but statistically speaking I think your mileage is likely to be much further without the pressure of VC funding, despite the propaganda to the contrary.

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    I think the network is a big pull - having a community of other founders that you can learn from and (perhaps most importantly for SaaS companies) sell to. Even just having access to BookFace, where you can see reviews of investors would be useful for someone with a small network.

    Having YC on your resume undoubted helps with getting in a room with an investor, hearing back from a reporter, or hiring employees. (Closing those deals is still up to the founder.)

    Ultimately, I think good companies can achieve these things on their own, and raise money while giving up a lot less equity on their own. Lately, I've been thinking, why not just try and raise $500k on my own and only give up 10-15% of the company?

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      Lately, I've been thinking, why not just try and raise $500k on my own and only give up 10-15% of the company?

      As a VC (such as YC), I expect you to go public or sell (aka liquidity event) for $100M+ so that I can see a significant return on the risk I took in investing in you. That's the contract I have with you and with the people that gave me money to invest.

      Is that what you want too?

      The keyword is alignment, why would anyone give you money if they know that your goal and theirs do not align.

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        Oh yeah, absolutely. If I choose to go that route (raising the money), it would be in order to scale up the company from "solo Indie Hacker" to something on track to IPO. I generally don't understand people who want to raise large amounts of money and feel no pressure get past $1M annual revenue... it doesn't add up. Alignment, like you said.

        Poor phrasing on my part, I didn't mean that to be a "take the money and do whatever I want with it" thing.

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    I applied for YC (got an interview in SF in June - didn't get in) for ego reasons. I wanted to be the kind of person who could get into YC. I do think the program would be a great experience but having spent a lot of time speaking to VCs and startups who have raised VC money, I'm 100% convinced that bootstrapping and being an indiehacker is a much more sane and sustainable path.