Insights: The Reasons and Methods behind African Entrepreneurs Applying to Y Combinator
In the realm of tech startups, Y Combinator has made a significant impact, funding numerous innovative companies worldwide. This includes a number of African startups, some of which were backed in the summer and winter classes of 2017.
One of the earliest African startups to receive funding from Y Combinator was Peta Sales, but current search results do not provide information about its latest activity status. Peta Sales was identified as participating in the winter 2009 batch, but is not listed on the website for that class. As for its current status, it remains unclear.
Another startup, Passerine Aircraft from South Africa, and Tress from Ghana, are currently inactive YC-funded African startups. However, it's worth noting that 37 out of 40 African YC-funded startups are currently active, indicating a thriving ecosystem of tech innovation on the continent.
One of the most successful YC-backed African startups is Paystack, founded by Akinlade. Despite a modest lifetime revenue of $1,300 at the time of their first application to Y Combinator, Paystack has since grown significantly. In August 2020, the company processed $150 million, a testament to its success.
YC's program consists of weekly off-the-record sessions with notable global entrepreneurs, regular meetings with YC partners, and a three-day pitch event known as Demo Day. The startup's YC application lives or dies on clear communication and the conviction of the founding team.
Interestingly, the typical founder of a YC-backed startup in Africa is a man. However, Y Combinator does not discriminate and does not require a patent, reputation of alma mater, introduction from a notable venture capital firm or angel investor, or a business plan to consider a startup.
In Africa, the program is divided into winter and summer batches and lasts for three months. The capacity to execute on a project based on a well-rounded appreciation of the potency of software is important for getting selected by Y Combinator. YC's thesis for identifying startups is captured in their motto: make something people want.
As of summer 2020, Y Combinator has funded 2,412 startups worldwide, with at least 40 of them being African startups. At least 14 of these startups have a leading financial component. To give the application reviewers context, it is not uncommon for African startups to pitch as some notable Silicon Valley startup for Africa.
It's also worth mentioning that at least 100 YC-backed companies are valued at $150 million or more, with 26 of these being billion-dollar companies. Flutterwave is the only African startup on YC's top 101 most valued companies.
However, it's important to note that 18.5% of YC startups worldwide are inactive, meaning nearly one in five are not active. For instance, Atrium, a $75m legal-tech startup founded in 2017 and part of YC's winter 2018 batch, shut down completely in March 2020.
For startups considering applying to Y Combinator, Seibel suggests three preliminary questions to evaluate their readiness:
- Do you have a well-rounded understanding of the potency of software?
- Does your vision seek to cover Africa instead of countries or regions?
- Are you ready to communicate your vision and conviction to Y Combinator's reviewers?
Y Combinator's FAQs is the best guide on the specifics of what to expect from the three-month period. The program has come a long way since its first batch in the summer of 2005, with no African company being part of that cohort.
In conclusion, Y Combinator's African journey has been marked by a mix of success stories and challenges. Despite the occasional setback, the continued funding and support of African startups by Y Combinator underscores the organisation's commitment to fostering tech innovation on the continent.
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