A bunch of these group have popped up but everyone I know will only apply to YC and TS... The other groups just don't have the credibility yet. I think techstars has done alright because it slid in as #2 and it has really gotten out front on the community side of things -- great job differentiating themselves from YC.

I don't think it will work to copy anything, I'm always going to give 6% to Paul Graham in the valley before I give 6% to Opie Taylor in Mayberry.

I think there might be an opening on the lower end of the market. Right now these groups are making total investments in companies around 50k (after program costs). That still requires a serious potential return to make a profit. So while they will tell you otherwise, they will rarely invest in an idea unless it has a very large potential market size. They will take 1% chance at a billion dollar return over a 50% chance at a million dollar return. Which leaves a decent number of smaller ideas on the table. The truth is that a company providing great software to dentist's offices will probably be ramen profitable before an idea like tipjoy -- but obviously the potential returns are a lot lower.

Intellectual capital is also a big problem. If you are ambitious and talented you have probably already moved to a tech hub. That said...

I would buy a giant house and go Heaven's Gate style. Recruit local talent that hates their demeaning code-monkey job and sell people on the vision. They get free rent and a very small stipend. Dig up 10 people like this in a secondary town and now you've got a little community going... Hackers in these small towns are usually really hungry for people who "get it" so it's not about the money. Snag really sharp kids right out of high school or college and spend some time building into them in a really intense way. It's really talent development in a lot of ways, but it could potentially be a great funnel for getting people connected.

And just to soapbox for a second, post-industrial age-graded education is dehumanizing and bureaucratic -- although it's been great for making mindless factory workers. But it's not working anymore, so sooner or later we'll move back toward an apprenticeship model where people learn in a holistic relationship-driven context. That's what these seed stage funds are doing right now -- and it seems to be working.

Great points. I think the bigger point is that it's not so much the formula (how long the program is, how much do you invest, is it a seed fund or an incubator, etc.) as the people who are doing it.

I'd travel halway around the world for ten weeks with pg & a bunch of brilliant YC geeks. There aren't many venues that have the same appeal.

It depends what their goal is. Most of them seem initially to have the goal of improving the startup scene in a particular region. But, as they then discover, there's nothing regional about the seed funding business. Founders come from all over, and leave afterwards for wherever they get more funding.

The way to help a region is to be the place where they get more funding. I tried a thought experiment about that (http://paulgraham.com/maybe.html). The problem is, it would cost a lot more.

In that essay (and I think, in other places) you've mentioned Wufoo as being a very unique and exceptional case - what, besides being based in Tampa, is so unique about them? I've never met the founders, so this isn't meant as a challenge, just curiousity.

There are a couple things. One is how tight the founders are. Two of them are brothers, and the third guy is almost a third brother. So they trust one another totally.

The other distinctive thing about them is how committed they are. You can see it in everything from the design of their site to their reputation for customer service. They would be aghast at the thought of doing something in a half-assed way.

I've said it before, but I don't understand why firms trying something YC-like don't try to differentiate themselves more. The accelerator for mobile, the accelerator for B2B / SaaS, etc. It would seem easier to differentiate yourself from YC along industry rather than geographic lines (assuming you're not crossing a national border).

This is exactly what I thought when reading the OP's post.

A Y-Combinator clone that specialized in industrial hardware or medical devices. Man, my brain would be in warp speed. I work for a medical device manufacturer but for all my experience, would never think of doing a product in this field because of the huge financial and regulatory hurdles. If yc-type guidance were available, I'd be going over ever problem I know of in this field to figure out if I could do a startup to solve it!

the added advantage of a "vertical incubator" is that all the companies could compliment each other.

an example of this on a far more grander scale is betaworks

the pain point is the amount of possible overlap.

Interesting... particularly as it's probably easier to build sufficient expertise in a vertical outside the normal geographies. The question to me is how many of these kinds of startups need seed-level funding versus proper VC funding? I honestly don't know.

Good point. Some of this probably already happens, it's just more informal... New York, ad/media. Washington, politics/government. Nashville, healthcare. Seattle, hipster music start-ups & social networks for cutters. :)

Let me know if you find an accelerator for SaaS

One difference that deserves more attention is that YC comes out of hacker culture while the clones don't; they've been started by people who have had business success but are not hackers, who tend to look at YC as a business model and not as the cultural experiment it also is. As I imagine it, the founding insight behind YC isn't so much "let's make a bunch of seed-stage investments" as "let's hack the economy". That, to me, is a fundamental difference. It's also precisely the sort of thing that most non-hackers would overlook.

Does this matter? My guess it is it matters a lot, because identifying good hackers and advising them are two of the most important things that YC does. These skills are not common. YC have them because they are hackers themselves. This also lends a dog-whistle aspect to the whole endeavor. To anyone who's part of the culture or has the mindset, PG's essays and various other things about YC are instantly recognizable and act as a beacon. This feeling of "they're one of us" is precisely what I miss in the clones.

With obvious exceptions, the economic fate of hackers has traditionally been in the hands of people who are not like them and do not understand them. A seed-stage micro-investment mentoring fund started by the one type is not likely to work out the same as a similar-looking fund started by the other. If this were gardening, good hackers might be weird-looking plants that are commonly mistaken for weeds. An unskilled gardener is likely to make two mistakes: either rooting them out (i.e. passing them over in favor of other, perhaps more businessy-looking species) or applying the wrong fertilizer etc. so they fail to thrive (i.e. not knowing how to work with them or help them grow).

One thing that follows from what I'm saying comes close to a prediction: if the essence of YC has more to do with a new investment model, then copies of that investment model should follow a similar course. But if it has more to do with amplifying the economic value of hackers, then you'd need to look for copies of that, and as far as I know there aren't any.

Incidentally, most hackers probably wouldn't be interested in starting a clone. They'd want to find their own angle instead. I wonder whether Marc Andreesen's new fund isn't closer to YC in spirit.

It's an interesting question, and I'd love to see your dissertation after it's done. Thanks for being willing to post drafts, etc...

It seems that a lot of cities/regions want to start tech incubators as a means of boosting the local economy. A number of cities that I've lived in want to start a "Silicon Prarie" or a "Silcon Forest" or a "Silicon FooBarBaz" in their neck of the woods because successful tech businesses produce a lot of good jobs and tax revenues. So, the city starts an incubator, promote their new downtown as a tech hub, and hope for technology companies to spring up and boost the local economy.

I believe that one of the reasons that Y Combinator succeeded was because it wasn't about boosting tech companies in regions, it was about funding startups. PG and Co. set out to hack the economy by seed funding crap loads of startups. So, to that end, they started funding startups in the locations that were best suited to that: Boston and SV. They then went on to localize primarily in Silicon Valley because they thought it was the best move for their startups. ( and they were sick of being bi-coastal )

The difference in those two motivations, is I believe a watershed between the wins and the fails. YC has done what's best for their startups because that's their primary goal. The vibe I get is that a lot of other incubators try to do what's best for their region and are therefore conflicted.

Interesting, and I agree that more and more YC clones are coming from outside the Valley. I guess the question is if the city/region has enough expertise to make a clone successful. Perhaps if focused on a more vertical field it has a better chance of success?

I've lived in 6 cities in the US: Minneapolis, Chicago, Providece, Los Angeles, Fresno and now SV. I've also spent significant time in Dallas, New Orleans and Toledo.

For me the issue is culture.

Chicago, there is a high tech community, but it is generally focused on helping the other industries in the area function. Chicago also tends to be kind of a jock driven town, and tends to scares geeks underground IMHO.

Providence, because of RISD and Johnson and Wales tends to be an arts/food driven town. Players from Brown don't tend to stay around long enough to influence the culture too much. They're too busy figuring out how to get into Harvard or Yale Grad school. There also tends to be a strong current of complacency among the locals that makes it hard to innovate technologically. The biggest tech firm in Rhode Island is GTech, a lotto machine maker.

LA is all about the movie and music industry (and a little bit about aerospace). There are plenty of geeks in LA, but they all tend to serve the larger interests of the movie, music and aerospace industries. A lot of geeks I ran into would have been interested in developing their own VFX shop, but you have to have a lot of connections to make that happen. LA is also run by pretty people. And, that makes it harder on geeks, IMHO. It made it hard for me, and I moved after a year and a half.

Fresno is all about farming, it's really hot, and I'm shocked I lasted a year. That's all I'll say.

SV on the other hand is steeped in technology and startups. My day job is as a ER nurse, and in the first year of being here, 3 people at the hospital offered to connect me with investors. I started the hackers and founders meetup ( www.hackersandfounders.com) a year ago, and now there's 350 people on my mailing list, and we have 20-25 people show up every 2 weeks to talk tech and startups. It's just in the air here.

I think that SV offers a much better ecosystem for startups than the other towns I've lived in my several orders of magnitude. There's already water, carbon, and oxygen. Silicon Valley's orbit is in the green belt of the startup sun.

Trying to do the same thing as YC in a different area of the country would require a lot of terraforming to be able to support a startup ecosystem. It's possible, but like colonizing Mars, it's going to be a lot more expensive to support an ecosystem there than on earth.

If I were going to recommend starting a technology company in another area, I'd definitely look at the strong industries in that area. If I were starting a YC clone in Detroit, I'd fund manufacturing technology startups, and perhaps robotics companies. If it was Dallas/Houston, I'd fund petroleum tech or energy startups. If it was San Diego probably biotech. LA, I'd focus on more media oriented startups. Fresno, or the rural midwest, farming automation technology.

Startups outside of Silicon Valley could have a competitive advantage if they can focus on building technology that supports the local industry. That way the networking that naturally happens can strengthen their business. I talk with a lot of hackers here that are interested in building tools for specific businesses or industries, but they have problems meeting people that work in those industries and aren't geeks. A seed fund could take advantage of that.

As a complete outsider I can tell you that, in my mind, the only thing separating Y-Combinator from the others you mentioned are Hackernews and PG's essays. Both of which are of such excellent quality that I would apply here before anywhere else. That's it, I don't know anything else about the people behind the program.

I would agree with you but recently I have really started to like the TechStars program. Why? Because of the impression given to me from their recent videos about the start-ups and the program that have appeared this time. The videos show how the program works, the openness, the mentoring, the city (Boulder not Boston), the community/spirit there, what the founders are like. When TechStars first started, I was thinking 'they have no chance, YC is the only place to be'; but now, I really respect what they have going on there, and wouldn't mind going there.

YC seems a bit more closed. Outsiders can't gage what it is really like except from a few vids here and there and the comments on HackerNews. Plus, with the increased popularity of HackerNews, it is quite difficult to track the comments from YC company founders. Of course, when someone gets in then they probably don't care any more, but it's always nice to be open and show people what you're all about. The same goes for all the other programs.

The point: if you're starting a new program, especially in a traditionally non-tech area, it is best to be open and show what the program (including location) is all about. It's just good marketing.

"the only thing separating Y-Combinator from the others you mentioned are Hackernews and PG's essays. Both of which are of such excellent quality that I would apply here before anywhere else"

I agree, with a minor shading of my own.

In my opinion the only thing that separates Y Combinator from the others is PG (and his (extended) team - Jessica, Trevor, rtm , YC alumni.. ). Yes most of us know them primarily through their writings (PG's essays and comments here, jessica's book and so on) and their public appearances (in startup school for example) but they engender a trust that I don't feel with the more "professional VC"/investor/banker led groups that attemp to duplicate YC's model. Partly this trust happens because PG is a programmer who also groks startups. But also, we've seen PG's thinking evolve over the years and that engenders a great amount of trust and comfort. You feel like you know these people, and know that they are good people. Some random guys with money to spare who put up equal amounts of money and even duplicates the same deal structure as YC doesn't begin to match up (imo).

With a random non hacker type (which is what these clones are, from a potential founders view point) I always have to keep my guard up because I don't know that they aren't trying to rip me off, pack my company board and so on. I feel I always need to keep a background thread running to see what they REALLY want at a given point of time as contrasted to my believing PG and team will be up front. Yes this is a subjective and possibly irrational decision on my part, but that is hard for some random vc type to duplicate.

Many many people tried to similair things here in Bangalore. None really got off the ground. Everyone I know who wants YC type funding thinks about travelling to California for 3 months, vs taking equivalent funding here.

As in programming, you can clone the company structure, you can't clone the people. When other groups are led by hackers of similar calibre who have had success with their own startups, and invoke the same feelings of admiration and trust, then they become viable alternatives to YC in my mind.

Just my 2 cents, but it may help the OP with his thesis!

Otherwise these clones , at best, provide a regional advantage (you don't have to travel to California, you can stay where you are / travel less ).

And pg's experiences from the 1.0 .COM era, and his connections.

In Pennsylvania, the "Y Combinator clones" AlphaLab and DreamIt Ventures are funded by the state of Pennsylvania (and a DreamIt partner is running for Congress!). AlphaLab is an overt incubator run by a larger early stage investment group and DreamIt is more of a direct YC Clone. The goal of the money they are given is to create jobs. Their motivations get more complicated when the taxpayers are footing the bill.

Probably the most common flaw in cloning Y Combinator is to make an incubator investing in micro seed magnitudes. Y Combinator is not an incubator; it's a micro seed stage fund. http://seedfunding.weebly.com/

I didn't realize AlphaLab and DreamIt are funded by the state. But as part of my project I hope to recognize the different types of funding sources & people that are starting YC clones. I've even heard about companies that are looking at running small programs like this. I agree that the motivations are complicated, and that's what I want to explore.

Interesting note about the funding. I was talking to a VC about this and while he wanted to support a similar type of program locally, he was very hesitant. Mainly because if he chose not to follow-on with funding, he would likely be killing the startup before it even really got going.

They address that last issue in this podcast (with the techstar founder):

http://www.venturevoice.com/2009/01/david-cohen-techstars.ht...

> Mainly because if he chose not to follow-on with funding, he would likely be killing the startup before it even really got going.

Good point. I'm pretty sure pg said someone similar on this site at some point.

That's true, but the chances of finding follow up funding are larger anyway if you already have a seed fund backing you.

The one things most VC's are scared of is being first (and the other thing is having missed an opportunity). It's a fine line between those two...

Good idea. It would be great to see a lot of incubators popping up, as it can have a significant impact on the overall economy.

It is not the funding that is the main reason for applying. Although some small amount of money is great to cover living costs so that you can devote full time to your project, it can be handled differently. What I think most of the people here are interested in is the post funding period - getting big investments and connections through those that already did the talk and walked the walk. Note that I am not referring to YC only, but also to all those that YC helped or involved. There is a lot to learn from such condensed entrepreneurial community.

However, don't idolize YC. They are not best. They are not even the first ones to do so. They are just best known and publicized.

I would highly recommend doing a criticizing and constructive thesis. That is - seeing the shortcomings of YC and suggestions on how to do it better. Your question to HN should be how to do it better?

Such thesis is benefiting to all then, YC and other that are copying the model, but most of all - us :)

My instinct is that I agree. But YC seems to be the top-tier choice for companies applying to the whole group of incubator-type programs. Is that because YC is seen as a better/bigger step toward connections and further investment?

It's not just that YC is seen as better; by the numbers alone they offer the best outcomes of any of the micro incubators/micro seed stage funds.

I would love to be able to verify that, though I agree it looks to be true. My dream would to get a fairly comprehensive list of startups to come from all of the different programs, and see which of those are a) still in business, b) received follow-on funding, and c) exited.

I know PG has these stats for YC, I'm just curious if he would share.

those stats wouldn't be hard to acquire. There are various lists of all the YC winners. Love to see a comparison of YC vs Seedcamp.

I'm hoping to compile them; I just know that PG keeps accurate records. :)

Couldn't that be partly because YC has had a head start, and its companies have had more time to grow than the newer micro incubators?

That's certainly one of the reasons that the numbers are so favorable.

The right way is to not copy it. Learn from it, see what worked and what didn't and adapt it to your specific goals.

Exactly. I'm hoping to write a generalized framework to help guide others in what's important and what's not, and how to adapt it to specific goals!

I love incubation. YCombinator and others FTW. Although you need to understand that there really isn't a secret sauce. Just like there is opinionated software/frameworks (rails) there is opinionated venture capital.

Ycombinator funds companies based on certain principles. Paul Graham and co. pick ideas based on what they see fit. They have built relationships with successful entrepreneurs,VCs, angels and other outfits based on their judgement which has lead to their some success. They do things a certain way and you/others should not try to copy them.

I think you can definitely try to tell their story and motivate others. You are not going to be able to make other people create or build another Ycombinator.

Too bad y2combinator[1] is no longer around. I'm sure they could help you :-)

1- http://web.archive.org/web/20070705045529/http://y2combinato...

* What are the reasons you would apply and accept funding from YCombinator? *

If I applied that's because of

- Place: I live in north-africa, so US would be better for business.

- Support: I can't handle tax/company issues and papers myself, if i hire a lawyer, it'll cost a lot.

- Promotion: More odds that I'll get better investors.

I'm working on a project right now. The amount of money that YC would invest in my project would be helpful, but not game changing at all (since I have savings).

The only reason I would consider applying is to have access to the resources and experience that PG would be able to share via his contacts and other YC alums.

This question is probably as hard and as interesting as "what makes entrepreneurs entrepreneurial"

Cant wait to see your results!