"EDITION 260"

Published: 3/25/2021

Good afternoon and happy post YC Demo Day! I had a doctor's appointment in the afternoon hence the delay in today's newsletter. And with YC's new batch just being announced, I thought that it makes perfect sense to talk a bit about the new batch and how YC is growing in India, and of course a couple of my favorite companies from the batch.

https://tcrn.ch/3rmhRBO: Y Combinator's latest batch

Yesterday was the bi-annual demo day of Y Combinator's latest batch of companies. This time around, 350 companies participated in the program and a whopping 41 from India! It was also the first time that non US companies made up more than 50% of the accelerator's batch and notably India was the country with the most number of founders, outside of the US.

YC has also scaled up quite quickly in India, just a couple years ago there would only be a handful of companies each batch but it has really ramped up in the last 2 years and that ramp up is very noticeable. The effect of YC has largely been positive for Indian companies as often these founders or companies have been overlooked by local investors and YC is one of the few funding opportunities that they have.

On the other hand, I do slightly worry about the outcomes for these companies. Some Indian YC companies try to raise their seed round around/after Demo Day (the culmination of the YC process) and some end up raising capital at valuations similar to their American peers. This is not a huge issue if the company is building for the US or global markets, but if they're raising seed rounds with little traction at $20-$30M pre-money valuation it gets much harder to grow into that valuation to then raise their Series A.

The number of pre-seed and seed stage investors has also gone up significantly in the country just in the last 2-3 years and founders have a lot more opportunities to raise their first round of funding (with the possibility of institutional capital as well), however there haven't been too many new firms emerge at being able to lead the Series A or B rounds other than the Indian firms, a few American firms and Tiger Global.

I'm very keen on seeing how the Indian market reacts if YC continues to grow like this in India. Is the Indian market ready for ~80 new seed stage opportunities each year, and how many of those eventually are able to raise a Series A and beyond. Just a couple batches ago, I used to hear how every single VC in India was rushing to fund YC companies before the batches would officially start and I do not hear that as much any more (for a variety of factors).

Coming to this year's batch, the themes of the companies participating were generally around companies being funded in India as well- EdTech, Fintech & around the healthcare space. There were also a couple of companies building on top of WhatsApp which looked quite interesting! And now here's a couple of companies in the current batch that I thought were really cool (restricting to a couple who I only came across recently):

  • BusinessOnBot: BusinessOnBot (BoB) says it's building the Shopify on WhatsApp (there were a lot of "Shopify for X" companies this batch), and it's quite sick- DTC brands and SMBs can automate a bunch of sales and user acquisition processes with BoB. A user can place and order, pay and track that same order all without leaving WhatsApp. I believe another company in the batch (Leap Club) uses them and I tried it out last weekend and was very impressed!
  • Veera Health: Polycystic Ovary Syndrome (PCOS) is a major health condition that affects 10-20% of all women in India (that's like ~65M - 130M women)!! And Veera wants to help women feel like they're in control of their PCOS with their treatment plan that combines their technology platform along with experts and doctors that women can speak to.T he startup launched a couple months ago and already 85% members have reported feeling β€œin control” of their PCOS after their first month.
  • Chatwoot: Chatwoot is building a customer engagement suite, something similar to Intercom/Drift, but the company's core product is Open Sourced. If you've ever seen a small speech bubble on a SaaS company's website, that a part of the product that Chatwoot is working on, and these businesses are huge (Intercom was valued at $1.3B in 2018). Moreover, there has been a trend with new companies emerging with the core offering being similar to popular large SaaS companies, but these new companies open source their offerings (PostHog, Airbyte). What this means is that, customers can either choose host the open source versions of the products for free (other than their cloud hosting costs) or pay the company to host the product for them as a managed service.
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