Ratio of great founders to native VC available is imbalanced: Y Combinator’s Adora Cheung

Next month, Y Combinator (YC), the Mountain View, California-based accelerator known for seeding iconic technology startups such as Airbnb, Reddit and Dropbox, will for the first time interview Indian startups right here in Bengaluru. The accelerator will screen applicants for its summer 2019 batch from 7 to 9 May and the application process starts from 12 April.

The accelerator runs two batches every year -- January through March and June through August -- and typically invests $150,000 (Rs 1.04 crore at current exchange rate) in selected startups in return for a seven per cent stake. Startups can apply from anywhere around the world but selected players have to take up residence in the San Francisco Bay Area during the three-month programme.

Though this is the first time the accelerator is on the ground here, homegrown startups have frequently made it to the programme. In all, about 40 Indian startups have been part of the YC programme. Notable among those are ClearTax, Meesho and RazorPay.

In an interview with TechCircle, Adora Cheung, partner at YC, spoke about what the accelerator expects from its excursion in India. Edited excerpts.

What encouraged you to conduct interviews in Bengaluru for the upcoming batch?

We have seen an increasing number of good applications from here and we figured it would be easier for everyone if we came to India for interviews. We also hope that people who may not have otherwise applied to YC will consider applying, since interviews are now potentially just a car ride away.

YC has funded plenty of startups from India. How, in your view, has the market evolved in terms of supplying technology solutions?

India has always been a country of very talented engineers. Lack of skills and ability to build has never been the issue. It’s just that mainstream adoption of the latest technology has been slower than the US or China, perhaps because it was slower in moving most of the country online. But this seems to be changing very rapidly now.

Do you also have plans to appoint an India head and set up local in-person programmes?

We don’t have any plans right now. But we come very often to meet and help founders and YC alumni. Last time, we were here for an entire month of December.

What unique challenges do you think Indian startups face from a funding perspective?

The ratio between great founders and native venture capital available is woefully imbalanced. If you ask me, on the spot, to list all the good Silicon Valley firms, I would miss a bunch. There are just too many. But I could probably list all the good Indian firms without any trouble because the list is short.

The imbalance doesn’t seem to have been a challenge for Indian startups backed by YC. Why?

Indian startups that go through YC are actually raising a lot from Silicon Valley investors, of which there’s plenty to go around. We see that as a huge advantage for founders to apply to YC since we’re probably the biggest source of high-quality leads for early-stage investors in the US.

How do you find technology startups here different from those in the Silicon Valley?

The fundamentals of running a startup are the same anywhere you are. This is why we’ve been good at helping startups all over the world.  

That said, every country has its own set rules — demographics, culture, infrastructure, regulations, etc. — that factor a lot into how a particular business works. As a result, there are plenty of differences in how they operate or sell product.

For example, consumer buying power is much lower in India (for now) so you can’t spend as much on user acquisition. Or salaries are much lower so you can hire a ton (or 100) more people and keep the burn relatively low.