Startups Weekly - We keep trying to reinvent startup accelerators

Saturday, March 26, 2022

Critiquing the value of a startup accelerator and demo days has been a decades-long conversation in the world of tech. The programs promise napkin-stage founders help with everything from finding their co-founders to hitting product-market fit to raising that pivotal first check. Led by worldwide programs like Y Combinator, Techstars and 500 Global, startup accelerators have birthed billion-dollar companies such as Coinbase and Stripe and become synonymous with the promise of activation energy.

Yet, every few months, entrepreneurs ask the same questions: Is precious equity worth access to a network? Is the true value of the program just an esteemed stamp of approval? Are demo days outdated? Is the best outcome for founders within an accelerator just a new round of financing? Is YC’s batch size just too big to stand out in?

We keep trying to reinvent startup accelerators, and that in and of itself tells me that the institution stays relevant, even if imperfect. Asking questions, after all, is the first step in changing the way things are done.

In January, I wrote a piece about how startup accelerators are overdue for a refresh in how they think about value add services. Days later, Y Combinator announced that it was increasing its check size to $500,000, up from $125,000 before. With Y Combinator Winter 2022 Demo Day happening next week, we’ll see the first cohort impacted by these changes — and that YC went more remote, more international and more ambitious on the impact it wants to have.

This year, as everyone will see, we’re changing the way we cover Demo Day to better reflect what we think is the most important part of accelerators: a way to see how a large cohort of startups is directionally thinking about the biggest problems in a certain subsector. Demo days, it feels like, have fully departed from a traditional presentation and pitch to investors, and more so offer a snapshot of a startup and the growth plus personality of its earliest days.

More next week, but in the rest of this newsletter we’ll talk about the outlier world of fintech, an Instacart discount and a cryptocurrency nonprofit overlap. As always, you can support me by forwarding this newsletter to a friend, following me on Twitter or subscribing to my personal blog.

Image Credits: John Lund / Getty Images

Deal of the week

Ramp confirmed that it has raised, yet again, but this time at a $8.1 billion valuation. The approaching decacorn valuation comes after the company hit unicorn status less than a year ago given that less than one year ago. Jeez.

Here’s why it’s important: Ramp, and fintech more broadly, feels like an outlier from the market turbulence we’ve been reporting on over the past quarter. Is the financial services sector protected from a broader venture pull back or valuation correction? On Equity this week, Alex and Mary Ann landed on a key takeaway: It’s a fintech world, and we’re just living in it.

Honorable mentions:

Image Credits: Bryce Durbin/TechCrunch

Refresh your Business Tech

Instacart’s biggest discount yet

Instacart is cutting its valuation nearly 40%, giving us yet another data point in the larger market re-correction happening to many pandemic-era success stories.

Here’s why it’s important: As Alex Wilhelm points out, DoorDash, another food delivery company, has seen its price-sales ratio fall from highs the year prior while Uber is hoping to scale its food delivery service. Instacart, still private, cutting its paper valuation ahead of a stock market debut may save it an otherwise bumpy reaction.

I guess the eggs and ham aren’t that green:

I kinda dig the Instacart growth plan
Mary Ann’s weekly fintech newsletter is launching soon! Sign up here to get it in your inbox.
Evergreen reminder to take advantage of code “EQUITY” when subscribing to TechCrunch+ for a hefty discount and gratitude.

Image Credits: jayk7 / Getty Images

Why web3’s wealthy are donating crypto instead of cash

Crypto reporter Anita Ramaswamy looked into the trend of web3’s wealthy donating in crypto, instead of cash. The story specifically explores how a rush of crypto donations to support Ukraine this month may spark a broader interest in the community to support causes via coins.

Here’s why it’s important: Beyond the cultural overlap in donations and crypto’s view of a more democratic way to support causes, there’s a technical benefit. Change founder Sonia Nigam, who is building a donation API with Amar Shah, explained the difference between traditional philanthropy and creator utility:

The smart contract technology allows impact to live in the product itself, and then give in perpetuity … we’ll see NFT collections go live, and they’ll set a goal; [for example] that of all secondary sales, 2% goes to combating climate change for life. Now, on every single resale, the creator’s initial intent is never lost, which is what gets them really excited. And for nonprofits, unlocking recurring channels for giving is always the number one goal.

Chain reaction

Why web3’s wealthy are donating crypto instead of cash image

Image Credits: Bryce Durbin

Across the week

We get to hang out in person! Soon! TechCrunch Early Stage 2022 is April 14, aka right around the corner, and it’s in San Francisco. Join us for a one-day founder summit featuring GV’s Terri Burns, Greylock’s Glen Evans and Felicis’ Aydin Sekut. The TC team has been fiending to get back in person, so don’t be surprised if panels are a little spicier than usual.

Here’s the full agenda, and grab your launch tickets here.

Follow our new senior crypto reporter: Jacquelyn Melinek! She’s already asking the big questions, on the stage and on the site.

Finally, if you missed last week’s Startups Weekly, read it here: “Failure is complex, especially in the world of startups.”

Seen on TechCrunch

Alphabet just spun out out its quantum tech group, launching it as an independent company

Musk reveals plan to scale Tesla to ‘extreme size’

Sequoia debuts Arc, a London/SV program to find and mentor outlier startups, backing each with $1M

Okta says hundreds of companies impacted by security breach

Seen on TechCrunch+

The product-led growth playbook

Despite declines, the value of crypto assets in DeFi protocols is up 3x from a year ago

It’s time to hold investors accountable and abolish pro-rata