Thoughts on Y-Combinator Demo Day

On Wednesday, we traveled up the road from our Palo Alto office to the Y-Combinator (YC) office in sunny Mountain View.  True has participated in YC Demo Day since 2006, and two of our portfolio companies, Rescue Time and BackType, came out of the 10-week YC program.

This trip was my first to Demo Day in Mountain View, and I was absolutely blown away by the energy and passion of all of the companies participating in this summer’s program.  For this event, each startup had only 2.5 minutes to tell their story, and each of them rocked it.

TechCrunch has a great write-up of the companies who presented, so I will skip ahead to some high level takeaways from my experience:

Quantity of Companies

The first cohort of YC startups in 2005 featured eight startups (two of which ended up joining Reddit.)  This year’s cohort launched 36 companies with live working products gaining traction and most generating revenue.  This is a true testament to the great program the YC team has built and been able to scale successfully.

Quality of Pitches

Kudos to every one of the graduates for an awesome job on their presentations.  By the end of their introduction, each startup had succinctly expressed their core value proposition and was able to spend the rest of the time showcasing what they had built over the short summer program. The YC team has done a great job coaching each of their startups in the methodology of how to tell their story.

Traction with Investors

Of the 35 startups that pitched yesterday, most had already secured part, if not their entire round of Seed financing.  Adam Smith, formerly of Xnobi, cited this as a function of Angel Investors who are simply looking to index across startups.  Even if that is the case, the strategy only works if investors are backing smart teams who can execute – something I believe that every YC Company that pitched yesterday has demonstrated.

Trends in the Market

I’m a believer that YC companies are a leading indicator for the next generation of technology for startups so the most interesting part of the day for me was learning what tools new startups are using to develop themselves.

Some of those trends this year included:

• Entire websites built to function as a single page (Hipmunk)
• A focus on human actions instead of data or graphs (inDinero, FutureAdvisor, AdGrok)
• Innovative ways to leverage tablets outside of the technology market (Brushes, Teevox, Koduco)
• Products that leverage email as a platform (Rapporative, OhLife)

Overall, I had a great experience and met a ton of interesting new entrepreneurs.  Following the Facebook announcement yesterday, I’m looking forward to the next YC Class and seeing how these companies can better integrate social and personalization into the online experience.