What type of companies does Y Combinator fund? [YC exploratory analysis]

A bit of background on Y Combinator, for those unfamiliar

Y Combinator (YC) is an American startup incubator founded in 2005 that has invested in many well-known companies, such as: Dropbox, Airbnb, Coinbase, Stripe, Reddit, Zenefits, Instacart, and Twitch.tv. Its portfolio of companies have a combined market capitalization of ~$65B [though, it’s worth noting that many of the companies are still privately held/reliant on VC funding, meaning the valuations are a bit loose].

YC invests and incubates in companies bi-annually, with summer and winter groups. YC receives applications from founders looking for seed funding, help developing their product or service, and help scaling their business. Of these applicants, a select few are accepted into the program. The data in this post comes directly from YC’s website and covers companies funded by YC from its inception to October 2016.

YC has funded >880 companies since 2005, and has generally been increasing the number of companies it accepts each year

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No surprise here that Y Combinator has been increasing its number of investments per year, as it begins to realize success from early plays and the notoriety of the firm grows.

YC funds winter and summer classes of companies each year, below are the seasonal trends:

newplot

YC has funded 450 Summer class companies and 433 Winter class companies, with similar batch sizes by year for both.

YC investments by vertical has invested in 10 major verticals, with B2B and Consumer topping the list

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YC investments by vertical by year

yc_bytype_byyear

As we can see, YC still is liking B2B and Consumer companies, but have significantly increased investments in Enterprise, Hardware, and Biomedical companies over the last 2-3 years. (An interesting additional view for this would be to normalize the sector n-counts for sector size, bonus points if someone does this.)

Most common words in YC company descriptions

text_frequency

I ran text frequency analysis on the YC company descriptions, stripped out most of the junk words, and was left with this list. This isn’t a super telling chart, but I did find some of these a bit interesting, so I dropped it in here. Looks like you should start an Enterprise, Hardware, or Biomedical platform company if you’re looking to get accepted into next season’s program. 🙂

The data/iPython notebook

As mentioned, this list was scraped from Y Combinator’s website, and I used Python to make the charts. If you’re interested in checking out the iPython notebook, it can be found here.

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