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Differences between Y Combinator and Seedcamp

In a recent Techcrunch Europe post Mike Butcher shared some Seedcamp data showing the startup trends in Europe.  In that post he made the following statement when comparing the organisation to its competition across the pond:

"Seedcamp has not followed the exact Ycombinators or Techstars model – taking on all potential early stage tech companies, not just ones created by 20-something hackers (Ycombinator’s particular penchant)"

A few readers, including myself, picked up on this in the comments. I don't feel this is a particularly effective way of differentiating the organisations. The differences that are actually significant enough to be worth highlighting between Y Combinator and Seedcamp are not types of people they fund. I say this having been through the interview process with Y Combinator, experiencing some parts of the Seedcamp selection process and knowing various businesses that have been funded by the organisations. The big differences are in the ways they are funded, choose their investments, provide support and market themselves.

Y Combinator is funded by people who have been there and done it. These are the same people who make the funding decisions after a 10 minute interview with finalist teams. They choose to focus on supporting great teams that are building products that they think people will want. They provide that support by:

  1. Investing just enough cash for the teams to focus on developing their products for three months.
  2. Providing just enough mentoring from a hand-picked collection of individuals that can make the connections teams need to succeed.
Seedcamp is funded by a collection of institutions. An appointed panel make the funding decisions by committee after spending days with finalist teams at Seedcamp week. They choose to focus on supporting great teams building businesses that have business models. They provide that support by:

  1. Investing the smallest amount they can justify given their institutional overheads (more than Y Combinator).
  2. Providing access to a huge number of highly respected mentors so teams have every opportunity to find the connections they need to succeed.
When it comes to marketing themselves, Seedcamp invests a huge amount of energy running a variety of events around Europe throughout the year. I've heard nothing but good things about these events and they have no doubt put Seedcamp in contact with many potential teams. Y Combinator's approach is to run one event a year, Startup School, which simply puts a few hundred potential founders in a room with a handful of the most successful entrepreneurs. I was lucky enough to attend last year while I was over for my interview with Y Combinator and it gave me a brilliant range of alternative perspectives on startups. Despite the success of Startup School, Y Combinator probably gains most contact with potential teams via the popular online startup community it created, Hacker News. Hacker News has become the primary source of news for thousands of software developers and startup enthusiasts around the world.

Seedcamp seems to focus on quantity where Y Combinator focuses on quality in all but one area. Y Combinator invests in around 50 companies a year where Seedcamp invests less than 10.

So to sum it up the really significant difference between Seedcamp and Y Combinator is that Seedcamp throws lots of resources at a small number of potential businesses where Y Combinator throws a small number of resources at a large number of potential products.

My personal belief is that Y Combinator's approach has far greater potential to find and fund a startup with Google-like potential. Seedcamp seems to have taken the idea of Y Combinator and diluted it to the point where it is palatable to the more conservative investment community in Europe. It is clear to me that Seedcamp is doing a huge amount of good to the European startup community as a whole by helping promote starting up as a career path. I only hope that their more conservative approach to early stage investment yields high enough returns in the long term to make it sustainable. What I'd really like to see in Europe is an investment organisation that genuinely goes to the extreme that Y Combinator does in making investments. The only way this is really likely to happen is if a high net worth individual, experienced in startups, takes on the project with their own cash while trusting their own judgement to make quick decisions. A few more people taking this kind of approach could give Europe the push it needs to start catching up with the startup community in the US.

I'd be interested in hearing your views on this, particularly if any of you can share insight into how TechStars or other similar organisations compare.

I'm currently trying an alternative approach to supporting technology startups at the earliest stage with an initiative I started this year called BootCycle. We're attempting to recreate many of the benefits of being part of a Y Combinator or Seedcamp-like programme without the funding. I hope to share some of the things I've learnt from this working alongside the other seven BootCycle participants soon.