Kyle McCarthy


The YC Factor: Analyzing the Value of Incubators


This week we got some details of Y Combinator’s largest exit to date, the $1 billion sale of video game network Twitch to Amazon. Twitch is an amazing story. It is like YouTube for watching other people place video games and has a 50 million strong daily audience. The deal gives The deal gives Amazon major heft in hardcore gamer market, which is populated with highly desirable users younger than 40 years of age. The deal also revived discussions about the relative value of startup accelerator programs.

For those who are not familiar, accelerators are organized launchpads for startups, They take a significant chunk of company equity - between 2% and 5% - in exchange for a micro-seed round of $250,000 or less (mostly less). In exchange the seed company gains access to a network of advisors and a structured “boot camp” instructional environment designed to spur growth. The accelerator experience generally culminates with a “demo day” when the startups all present their products and, ideally, venture capitalists take out their wallets.