Minutes before Nitthin Chandran was set to present his startup to a powerful group of foreign investors, the power went out in his apartment in Bangalore. The timing couldn’t have been worse: power outages are par for the course in the city, where Chandran was presenting remotely via Zoom, but there was life-changing money on the line.
Chandran, the founder of MedPiper Technologies, was pitching his Indian hospital-staffing startup for this year’s Demo Day. The two-day event is the culmination of Silicon Valley’s most well-known startup accelerator program, Y Combinator; notable program graduates include Airbnb, Stripe, and DoorDash.
The stakes were high, so Chandran came prepared: his Y Combinator–appointed mentor had advised him to upgrade his internet speed and make ready multiple backup options for situations just like this one. Saved by a spare dongle he’d bought on sale at his local market, Chandran delivered his one-minute pitch to an unseen audience of high-powered investors and thousands of viewers, all from his apartment in Bangalore.
In spite of the blackout, Chandran kept his cool: “We practiced maybe 100 times before Demo Day.”
For the first time in its 15-year history, Y Combinator went fully remote with its famed startup accelerator program. With the coronavirus pandemic making travel and in-person meetings nearly impossible, everything from workshops to the all-important Demo Day went online. The remote experience may have flattened the in-person interactions that drive some of the tech industry’s biggest deals. But founders from non-Western markets say that attending Y Combinator remotely didn’t hinder their success — in fact, it helped. Internet connectivity issues aside, foreign founders say the first fully remote Y Combinator has put these companies on a more equal footing with their American counterparts.
In pre-pandemic times, founders accepted to Y Combinator were flown to San Francisco, where they spent three months developing their startups before presenting to funders at Demo Day. For non-American founders with operations outside the United States, this often meant spending a full financial quarter away from their teams and home markets to attend workshops and networking events.
“You talk to other international founders, and they’re like, Oh yeah, I spent most of YC on a plane,” said Iain Usiri, a Tanzanian founder whose startup Ramani presented at last week’s Demo Day. By going remote, “The biggest logistical problem is solved,” he said. “You’re on par with a U.S. founder who is in his home market.”
Under normal circumstances, Usiri might’ve fretted over his outfit choice or physical gestures on Demo Day. “Personally, I do well on a stage,” he said. But this time, he and other founders in his class invested in backup internet, high-quality microphones, and new lighting, to ensure their Zoom presentations go as smoothly as possible. A remote presentation has its own anxieties: Usiri said he was so paranoid about power outages in his home in Tanzania, he had nightmares about it leading up to Demo Day. Nicolás López, co-founder of Justo, a Chilean food-delivery startup, said he worried about competing with social media notifications and emails that might be popping up on investors’ screens during their demo.
But logging onto Y Combinator from the comfort of their home markets meant founders could maintain their startups while benefiting from Y Combinator’s coveted mentorships. “Between when we applied for Y Combinator in March and today, we grew our team from 10 to 95,” said López. “I don’t think we would have been able to do that if we had been in Palo Alto for the past three months.”
In Bangalore, MedPiper’s Chandran, who is building a database of verified doctors and nurses in India, was able to take in-person meetings during the period. He said he signed up to 40,000 medical professionals during his time with Y Combinator. “We don’t think we would have done even 60 to 70% of the sales which we were able to close [had we been away],” Chandran told Rest of World. “All these sales were done in person, walking into hospitals.”
Paradoxically, the remote nature of this year’s Y Combinator meant more face time between founders and partners. “I was asking for office hours all the time, sometimes three meetings a week with partners,” Arthur Alvarenga, founder of Brazilian startup ChatPay said. “Everyone was very available, and with Zoom, things moved faster. You could get on a call faster than going to campus to meet with them if we were in person.”
Crucially, the pandemic has forced investors to consider any and all investments remotely; it’s leveled the playing field. Alvarenga, based in Brazil, might’ve missed out on chances for in-person meetings. But on Zoom, he’s just as remote as a founder in Boston. Both current and former non-Western Y Combinator participants said that funders are now more willing to take meetings and close deals over Zoom, where they once might have required an in-person meeting. Foreign founders in this batch of Demo Day presenters said they walked away from the event with more than 100 interested investors — far more than they could muster in their local markets.
Thomas Hellman, professor of entrepreneurship and innovation at Oxford’s Saïd Business School, said that the remote nature of today’s business environment has changed investor behavior, perhaps to the benefit of non-American founders. “Investors who said they would never invest unless they met a person have now written checks to entrepreneurs without meeting them,” he said.
But a willingness to close deals over Zoom hasn’t changed some of the inherent challenges in raising money as a foreign startup. U.S.-based companies still constitute the majority of the Y Combinator batch: 39 of the 197 startups participated from Asia, Africa, and Latin America. Hellman said that, in lieu of organic meetings and face-to-face interactions, venture capital firms are likely to rely on their own referral networks, which he said are essentially frozen during the pandemic. “The biggest thing to look out for is how networks are going to retrench,” he said. “That could lead to more privileged entrepreneurs having access to capital.”
Despite a more remote-friendly environment, Hellmann said foreign startups still face higher barriers to raising funds. Local companies may still have an advantage, even if it’s a smaller one. “Just because Zoom is making this more democratized, it doesn’t change the fact that some investors are just not going to understand your market or want to invest outside the United States,” said Alvarenga. “And that’s a root problem.”
But for the half a dozen founders from this summer’s batch of presenters who spoke with Rest of World, internet outages and Zoom presentations were minor inconveniences compared to their otherwise positive Y Combinator experiences.
“The real value of YC is the network,” said Alvarenga. “The more quality people you put in, the better the network becomes.”