Together with a group of TechCrunch people, I focused my attention on Y Combinator this week. The Summer 2021 cohort of the elite accelerator included 377 startups. We covered every startup that was presented, and selected our favorites.
It's a wonderful experience to listen to founder after founder present their ideas. Each one is a minute long and each slide has a lot of optimism. This is why I love covering demo days. I get a clear view of where innovation is heading next, which behemoths will be ripe for disruption, and what founders consider a witty competitive advantage versus a simple baseline.
I do have one caveat. Although YC represents an impressive snapshot of startup leaders and decision-makers, it is not representative of the next generation of diversity-focused leaders and decision-makers. Although the accelerator saw small increases in LatinX and women founders, it also saw a drop in Black founders. The urgent need for diverse accelerators is evident more than ever. This, according to some members of the tech community, is Y Combinators greatest blind spot.
With that in mind, let me leave you with some takeaways from hundreds of pitches. Here's what 377 Y Combinator pitches taught us about startups.
Instacart walked so YC startups can walk. Instacart is a Y Combinators most valuable graduate. This makes it even more exciting that a few startups in this summer's batch are eager to challenge the giant. Instead of focusing on speed, startups are looking to improve the grocery delivery experience by using premium produce, local recipes, and even unattractive vegetables. This suggests there could be a new chapter of grocery delivery. In which ease isn't the only competitive advantage. Pre-seed crypto is much quieter than fintech. YC is more like a fintech accelerator now than ever before. However, when it comes crypto, there weren't as many moonshots that I would expect. This was a topic we discussed on the Equity podcast. If anyone has any theories, I'd love to hear them. Edtech is looking to disrupt artsy subjects. When it comes to disruption, it is common for edtech founders to gravitate to science and mathematics. Why is this? It is easier to scale services that answer only one question from a pedagogical standpoint. Math may be able to fit in a box for an AI-powered tutoring bot that can use tech, but arts may need a bit more human interaction. Spark Studio and Litnerd are just a few of the edtech startups that have focused on the humanities in their pitches. It is shocking, but it is a great milestone in edtech to rethink the way a bookclub is read. Sometimes the best pitch may not be the best. One pitch stood out because it addressed the elephant of the room: Were we all stressed? Jupe is a glamping-in a-box seller. COVID-19 was a likely factor in the success of his business. Because the founder used part of his pitch for investors to remind them to breathe, it was a long two days. It is important to be human and speak like one these days.
Let's exhale. Let's continue with the newsletter. It includes nostalgic nods at Wall Street, public filings, and my favorite podcast. As always, you can find and support me on Twitter @nmasc_ or send me tips at natasha.m@techcrunch.com.
Wall Street as it was in its old days
Founders can get confused with the number of new funds, solo-GPs, and other capital sources available. Although funding has moved away from the three Sand Hill Road guys, it is also becoming more fragmented. This means that entrepreneurs must be more creative in filling their cap tables. I spoke with a recently venture-backed startup about a possible solution: a return back to Wall Street.
Here's what you need to know: Hum Capital aims to make it easy for investors to allocate their resources to aspiring businesses. This startup aims to replicate the old-school Wall Street world, where ambitious business owners found the best financing option to achieve their goals. It is not today's dance of startups trying prove themselves worthy of one type of capital. I will tell you more about the company in my story.
This stage is where Hum Capitals product can be easily explained:
It connects businesses with the available funders through artificial intelligence and data. It connects with a capital-hungry startup and ingests financial information from more than 100 SaaS systems including NetSuite, QuickBooks, and Google Analytics. Then, it translates these data to the 250 institutional investors on the platform.
From Hum to mmhmm
IPO filings & Other Hubbub
Toast was at the top of the list when the pandemic hit startups. Toast, a restaurant tech startup, had to make a number of hard decisions as many of its clients in hospitality had to close down. Toast made headlines again months later with a drastically different message: It's going public and here are all our financial data.
Here's what you should know: Toast published its S-1 this week. It offers a glimpse into the startup's impact on the COVID-19 pandemic, as well as answers to questions about why it is going public. Alex took five key points from the Toast S-1 after tearing apart the Warby Parker S-1. My favorite excerpt? Toast was smart enough to diversify beyond its hardware and hand-held payment processors.
Toasts' two biggest revenue sources, software and fintech, have experienced steady growth quarter-over-quarter. Although hardware revenues are less consistent than software, they have been moving in a positive way this year. They set an all-time record in Q2 2021. Without software revenues, Toast would have suffered a worse second quarter. Its growth wouldn't have been as rapid without its payments revenues (its fintech line, to be more precise). Toast's broad revenue mix has proven to be a good investment, while also allowing for a lot of growth.
Butter or jam
Around TC
Did you already buy your tickets for Disrupt? Here's the link with a discount for you.
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