What 377 Y Combinator Pitches Will Teach You About Startups – TechCrunch

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Along with a group of other people from TechCrunch, I spent this week extremely focused on one event: Y Combinator. The elite accelerator announced a staggering 377 startups as their summer 2021 cohort. We’ve covered every single registered startup they’ve featured and pulled out a few favorites:

There is something serious and magical about literally spending hours listening to founder after founder present their ideas, with a minute, a single slide, and a lot of optimism. That’s why I like to follow the demo days: I have a tunnel vision of where innovation is going, which giants are ripe for a break, and what the founders think is a witty competitive advantage over a simple baseline.

That said, I’ll share a caveat. While YC is an ambitious snapshot, it’s not entirely illustrative of the next wave of decision makers and leaders within startups from a diversity perspective. The accelerator recorded small gains in the number of LatinX women and founders in its batch, but decreased in the number of participating black founders. The need for more diverse accelerators has never been more obvious and, as some in the tech community argue, is Y Combinators’ biggest blind spot.

With that in mind, I want to leave you with some takeaways I’ve had after listening to hundreds of pitches. Here’s what 377 Y Combinator pitches taught me about startups:

Instacart walked so that YC startups could walk around. Instacart, last valued at $ 39 billion, is one of Y Combinators’ most successful graduates, which makes it even hotter that a number of startups within this summer lot want to take on the behemoth. Instead of pursuing the obvious speed, startups are looking to improve the grocery delivery experience through premium products, local recipes, and even ugly veggies. It suggests there may be a new chapter in grocery delivery, one where ease isn’t the only competitive advantage. The pre-seed world of Cryptos is quieter than fintech. YC looks more like a fintech accelerator than ever, but when it comes to cryptocurrencies, there haven’t been as many moon shots as I would have expected. We discussed it a bit on the Equity podcast, but if anyone has any theories as to why, I can’t wait to hear them. Edtech wants to interrupt the artistic subjects. It’s common to see edtech founders flocking to subjects like science and math when it comes to interruptions. Why? Well, from a pure pedagogical perspective, it’s easier to scale a service that answers questions that only have a right answer. While math can come in a box that works for an AI-powered tutoring bot, the arts, on the other hand, might require a little more human touch. This is why I was thrilled to see a number of edtech startups, from Spark Studio to Litnerd, focusing on the humanities in their presentations. As shocking as it may sound, rethinking how a bookclub is read is definitely a refreshing milestone for edtech. Sometimes, the best pitch is not the pitch at all. One step stood out simply because it addressed the elephant in the room – they were all stressed out. Jupe sells glamping-in-a-box, and the profitable business likely benefited from COVID-19. I remember this because the founder used part of his speech to tell investors to breathe, because it’s been a long two days. Being human and more importantly speaking as such is what it takes to stand out these days.

On that note, exhale. Let’s move on to the rest of this newsletter, which includes nostalgic nods to Wall Street, public documents, and my new favorite podcast. As always, you can find and support me on Twitter @nmasc_ or send me suggestions at [email protected].

A throwback to the old school Wall Street

With so many new funds, primary care doctors, and alternative sources of capital on the market these days, the founders are confused. Funding may have shifted from three dudes to Sand Hill Road, but it has also become more fragmented, meaning entrepreneurs need to be even more sophisticated in how they fill their cap tables. This week I interviewed a recently funded startup who proposed a solution: a throwback to the old school of Wall Street.

Here’s what to know: Hum Capital wants to help investors allocate their resources into ambitious businesses, perfectly. The startup seeks to emulate the old-school world of Wall Street, which has helped ambitious entrepreneurs find the best financing option for their goal, instead of today’s dance of startups trying to prove value for one type of capital. In my story, I have explained more about the business.

At this stage, the Hum Capitals product is easy to explain:

Use artificial intelligence and data to connect businesses to lenders available on the platform. The startup connects with a capital-hungry startup, ingests financial data from over 100 SaaS systems, including QuickBooks, NetSuite, and Google Analytics, and then translates it to the roughly 250 institutional investors on its platform.

Hum to mmhmm:

IPO documents and other hustle and bustle

Image credits: ansonmiao / Getty Images

When the pandemic started affecting startups, Toast was at the top of the list. The restaurant tech startup has undergone a series of deep layoffs as many of its hospitality industry clients have had to close. Months later, Toast hit the headlines with a dramatically different message: it’s about to go public, and here’s all of our financials.

Here’s what you need to know: This week, Toast released its S-1, offering a portrait of how the startup was affected by the COVID-19 pandemic and answering questions about why it’s now going public. After tearing apart the Warby Parker S-1, Alex took five takeaways from the Toast S-1. My favorite song? Toast has been smart to diversify beyond its hardware, portable payment processors:

Toast’s two largest sources of software revenue and fintech revenue have seen steady growth on a quarter-over-quarter basis. Hardware revenues have proven slightly less substantial, although they are moving in a positive direction this year and have set what appears to be an all-time record result in the second quarter of 2021.

Toast would have had a much worse second quarter last year if it hadn’t had software revenue. And since then, its growth wouldn’t have been as impressive without its payment revenues (its fintech voice, loosely speaking). The broad revenue mix that Toast has built has proven to limit the downside while opening up plenty of room for growth.

Butter or jam:

Around TC

You already bought your tickets for Disrupt, right? If not, here’s the link, with a fancy discount from me.

Now that it’s out of the way, I want you to listen to Found, TechCrunchs’ new podcast that focuses on talking to founders early on in building and launching their companies. Recent episodes include:

During the week Seen on TechCrunch Seen on Extra Crunch

Talk next week,

n

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