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Will Y Combinator fund a service Company?

5 points by khurrams ↗ HN
Hi We are a Lahore, Pakistan based software startup that focuses on developing Mobile2.0 ( IPhone and Android ) application. I wanted to know, can i apply for YCombinator or only product based startups get funded ? www.geniteam.com

16 comments

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rwalling
YC funds startup with great growth potential; companies that can "scale" well. Service companies scale linearly, and require you to hire additional personnel to grow, whereas product companies scale exponentially compared to personnel.

So my guess is YC will not fund a service company.

khurrams
This is right analysis. However, ROI might be lesser but risk of failture would be lesser as well ? But, there is chance that we *"might" become a brand for IPhone apps development. If you can build reuseable libraries, then i beleive you can scale faster ?
pg
Venture investors are not looking for things with a low risk of failure. In fact, all other things being equal, we're looking for the things with the highest risk of failure-- like starting a new search engine in 1998.
Retric
It's not that they like risk the are just more willing to invest at high risk than most people. Would you drop 10 Million for a 1 in 500 chance of 10 Billion dollars? It's a good bet bet but it can take a while before your first hit.
motoko
Would I spend 1e7 make an investment with an expected value of 1e9*(1/.5e3) = 2e6?
motoko
Hm, on closer inspection, I would for 10 billion and an average 2x return. I sure that wish I could delete both these comments.
DabAsteroid
Venture investors are not looking for things with a low risk of failure.

Doug Richard (of BBC's Dragons' Den) says the same thing, here (starts at 4:10 of 6:57; moneyline at 5:30):

http://www.youtube.com/watch?v=Z71dl3lZdvU

You have to understand how investment works. The reason it [the risk-focused pitch] works well is because if there is no risk, there cannot be commensurate reward. I'll repeat it. If there is no risk, there can't be reward. If it's not a risky opportunity, then there's no reward of equal dimension. If you come to me and say, "I've got a risk-free investment," the first thing I know is, there's not much money to be made. There's no free lunch in this world.

davidw
As a service company, would it be feasible for you to move to the US for three months, away from your team?
khurrams
Yes, this would be possible. But , see its extremely important to move to USA and learn about ecosystem.
rokhayakebe
Yes you can apply. But.

If you want to develop software for clients at their request, then it will be hard for YC to invest in your company.

If you develop proprietary software and license it to other companies that will need support, and customization, then it should be fine.

If your service allows clients to outsource customer service operations or IT support and you show you can easily scale it, then it should be fine.

khurrams
We have a mixed model : We have developed few reuseable components for quick IPhone development. However, people using those would be developers. I dont have the numbers though. You might consider reviwing our startup at (www.geniteam.com).
vaksel
what exactly do you hope to achieve with a mere $15K? Even in pakistan that can't be a lot of money
khurrams
Hi I think basic reason would be learning from Technoprenuers and mentors, because we dont have much success stories within Pakistan. With 15 K US $, we can support a team for 3 months. However, more important perspective is : Can we become a brand for building IPhone Applications faster, better and cheaper ? Can we build applications and charge subscription for maintiance ( we already are charing small amount ) ? Is the segment lucerative enough to make good profits for next 2-3 years ?
khurrams
Can anyone provide suggestions, as how can i "repackage", what we have to pitch to YC-Combinator ?
khurrams
I am thankful to everyone for providing assistance. I have submitted the application based on my understanding.