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37 Y Combinator Companies Have Valuations of or Sold For At Least $40M. ~Paul Graham

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Leena Rao reports on Paul Graham's latest humblebrag:

Y Combinator co-founder Paul Graham just Tweeted an interesting data point about the valuations of YC startups. As of now, Graham says that 37 Y Combinator companies, out of 511 startups, have valuations of or sold for at least $40 million.

My first thought when reading Graham’s Tweet was which companies are included in this group. Graham says that Rap Genius is on the list. And there are a number of obvious ones because of acquisition numbers and valuations from past funding round of some of YC alums. Facebook just bought Parse for $85 million. In its last round, Dropbox was reportedly valued at $4 billion. Heroku was bought by Salesforce for over $200 million.

Airbnb is reportedly valued at $2.5 billion. Loopt was acquired for $43 million. Zynga bought OMGPOP for over $180 million. Cloudkick was reportedly sold for $50 million, and SocialCam sold to AutoDesk for $60 million.

Other startups that could be in the $40 million-plus valuation club include Stripe, Optimizely, Justin.TV, Xobni, Scribd, Hipmunk, Disqus, among others.

In 2011, Graham wrote that the incubator has had 25 companies acquired, 5 of them for over $10 million, but the total value of the remaining companies at that time was higher the total value of the five acquisitions at the time. As of last year, YC had launched 380 companies, which had raised just over $1 billion in total, with each company averaging about $2.7 million. The amount raised has since been updated to just under $1.5 billion. And The New York Times recently reported that the average value of a Y Combinator start-up is $22.4 million.

Okay, we get it, you're awesome. By all means, please keep humblebragging.

Rap Genius worth $40 million? I will never be able to think of Rap Genius without thinking of this filthy but hilarious post about selling out, which fantasizes about being able to "garrote the RapGenius founders":

As an aside, $40 million was an interesting cutoff number.

I wonder if that's the implied dividing line between perceived success and failure.

Henry Blodget analyzes chances for startup success:

A company accepted by Y Combinator, therefore, has less than a 1-in-10 chance of being a big success.

More alarmingly, the companies accepted by Y Combinator are only a tiny fraction of the companies that apply.

Some have estimated that Y Combinator's acceptance rate is 3-5%.

If we use the 5% rate, we can estimate that Y Combinator has received about 10,000 applications for the ~500 companies it has chosen over the years.

Assuming Y Combinator has even a modest ability to pick winners, therefore, the odds that a company applying to Y Combinator will be a success are significantly lower than the odds of success of the companies accepted into the program.

If only 37 of the companies that have applied to Y Combinator over the years have succeeded, this is a staggeringly low 0.4% success rate.

Put differently, only one in every 200 companies that applies to Y Combinator will succeed.

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