YC fellowship and YC

Last week, YCombinator announced its fellowship program to help ‘more people start startups’. It will give selected startups (~20) guidance and check of 12K without any equity. I am a big fan of YC, but ‘without any equity’? Why would you do that?

Of course, one reason is, as SamA mentioned that YC wants to help ‘more people start startups’ and that they want to experiment with remote teams, but this still doesn’t explain why they would give away 12K without taking any equity? It is a small amount for YC, and not so small amount for a startup who have just learned how to crawl. This money, along with what YC is good for and its brand name is certainly a killer combo for this startup.

But, whats in it for YC? They can certainly throw away the money but, there are no free lunches in the silicon valley. There has to be something here. I believe, it is what everyone wants right now. A window to the future.

YC will now be able to uncover the cool startups (team/ideas) that would have otherwise taken 6 month to a year to catch their eyes. And with that they can:

• Create close ties with promising startup early on. Reduces the risk of startup going with other accelerators and investments.
• Prepare itself for the future. By looking at what might be coming in, in the future batches, it can prepare itself on what it might soon need.
• Raise the bar of future YC batches. Better prepared startup = better investment.
• Improvise the current YC batch selection. They know what might be coming in the next batch so that can better decide whether to invest in a certain startup right now or wait for that awesome startup that is coming in the next batch. Just like NFL coach watching college football games. It certainly involves a lot more math and finance number games but I am just giving a gist of it.