Y Combinator (YC), which is often thought of as the most prestigious and sought after tech incubator in the world has started to accept nonprofits into their program. The very first nonprofit to be included in YC was Watsi in 2013. In their latest batch (YC Winter 2014), 7 out of 75 startups are nonprofits.
It’s really great to see an incubator that’s responsible for the success of many popular tech companies like Reddit, AirBnB, Dropbox and Optimizely to name a few extend its expertise and resources to help nonprofits. Nonprofit founders attend the same program as tech entrepreneurs. They have to move to the YC office in Mountain View, California for a period of 3 months to focus completely on building the product. YC also provides initial funding to qualifying nonprofits which is in the form of a donation unlike their for-profit startup funding model which is equity based.
YC has just closed their applications for the 2014 Summer batch. If you are keen to apply, keep a watch on their site, they will be opening the process for the Winter 2015 batch sometime in Fall this year.
I was fascinated to know what it must have been like for a nonprofit person to be surrounded by tech entrepreneurs mostly building solutions for the first world problems. I reached out to Julia Kurnia of Zidisha, one of the nonprofits from the current batch to learn about her expereince. Zidisha is a web based microlending platform that’s doing microfinance differently. As unlike Kiva and other web microlending platforms, Zidisha connects lenders directly with borrowers and offers loans at a dramatically much lower price of 0-15% than compared to any other microfinance institution in the world. The industry average interest rate on the loans made to the poor is 40%. There are a lot of things that Zidisha is doing different to provide affordable loans to entrepreneurs in developing countries. I’ll be sharing more about that soon.
Julia has been at the YC Mountain View campus for the past 3 months. She has come all the way from the East Coast along with her 3 year old son to attend this program. The time I spoke to her, Julia had just got over with the demo day – held on the last day of the program. Demo day is where startups pitch their product to a room full of investors. She is now actively focused on raising funds for her organization.
We’ve seen 15% week by week growth measured in terms of loans made since we joined YC. I urgently need to raise funds to add staff, hire engineers to catch-up with this growth – Julia Kurnia
Deepa Chaudhary (DC): How did you hear about Y Combinator and what was your motivation to attend?
Julia Kurnia (JK): One of our advisors who lives on the West Coast was familiar with Y Combinator and he suggested we apply for the program. I had not heard of Y Combinator before, being on the East Coast I wasn’t very familiar with California’s tech culture.
Applying for YC wasn’t primarily for money. In our case it was more like we needed a new kind of expertise that we didn’t have access to. My background is in grant management, a very different worldview from how to grow a tech startup. At Zidisha we were faced with a challenge last year – we were not able to balance growth and risk. It was a problem I wasn’t able to solve on my own. At YC they are experts in growing internet startups and optimization. Being at YC has been kind of a paradigm shift for me. There are a lot of intangible ways that YC has helped us. For instance at YC we learnt about using machine learning to control fraud on out site which used to be a big threat. Lots of little things like these have added up to make our product better.
DC: What was your experience like at YC? How was it being amongst tech entrepreneurs?
JK: I have never been around so many brilliant people in one small place before. It was just incredible to be there and get concrete help on problems. During the 3 month period, YC organizes dinner every week, where they invite successful tech entrepreneurs to give a talk. The entreprenurs talk about how they grew their idea, what was it like when they were back in our place, before they build their huge companies. Those talks were really transformative.
YC is kind of a permanent network, once you are in you can continue to work and seek help as long as you need help – Julia Kurnia
DC: Now that you’ve completed the program, what’s next?
JK: We were looking to raise funds before joining YC and we’ll continue to do that now. Typically at YC for the time you are there the focus is entirely on improving your company not on funding, It’s on the demo day which is the last day of the program where we get to meet different investors.
DC: What kind of investors have you met?
JK: A variety of donors from private, wealthy individuals who are interested in funding exciting development projects to traditional Foundations. YC does not guarantee funding. They help by holding the demo day, giving you a chance to present your company to potential investors. It is upon you to follow-up and set meetings. YC did give a small donation at the start which is just enough to cover the cost of attending the program.
Julia has documented her YC experience and the help she received on the Zidisha blog. Its very interesting to see how her product evolved during her time with YC.