YC's standard deal and funding evolution

John is joined by Carolynn Levy, Chief Legal Officer of Y Combinator (YC). They discuss YC’s evolution into the world’s most prominent startup accelerator. Some of the famous startups to come out of YC include DoorDash, Airbnb, Stripe, and Coinbase. 

Carolynn joined YC in 2012. Since then, the organization has grown from a small early-stage investor to a robust platform funding approximately 600 startups annually. 

In 2012, companies were evaluated in two seasonal “batches,” but YC’s growth now requires having four seasonal batches every year. Each batch now includes approximately 150 startups. Each startup receives $500,000 in seed funding and gains access to a network of alumni, ongoing mentorship, and lifetime support through YC’s internal platform, Bookface.

To select the startups, YC evaluates up to 20,000 applications per batch, relying on human review and in-person interviews, where selected applicants receive immediate decisions on whether they will be included in the next batch. The startups included in a batch work on their product for three months. Then, on Demo Day, the founders are given the opportunity to pitch their companies to a room full of investors. That room is now supplemented by online participation for broader reach.

In Carolynn’s opinion, strong, resilient, and flexible founders are the most crucial ingredient for a start-up’s success and more important than the idea for the project itself. YC favors entrepreneurs who are focused on product-market fit and is cautious about early-stage founders who are overly preoccupied with legal formalities. Optimism is crucial in the startup world. This has caused Carolynn to shift her mindset from risk-averse legal training to embracing bold innovation.

As the Chief Legal Officer of YC, Carolynn leads a team of seven lawyers that handle everything from entity formation and investment paperwork to founder breakups and brand protection. Recently, immigration issues have posed additional challenges due to the global nature of YC’s business.

The episode offers a rare inside look at how YC balances legal oversight with startup culture, emphasizing practicality and a deep respect for entrepreneurial vision.

Podcast Link: Law-disrupted.fm
Host: John B. Quinn
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi