The 10 YC Companies (S18) I’d Invest In
By this point, you should be pretty used to me writing about the companies I’d invest in from YC! If you haven’t seen them yet, here are my past posts for the YC W18 class and S17 class if you want to check how my predictions have performed.
YC’s Summer 2018 class was one to remember! 132 startups, with a very high percentage of both B2B software companies (30%) and companies based outside of the United States (28%)
These companies presented to YC partners and potential investors on 8/20 and 8/21/18.
Interested in Investing in Startups Like These?
Check out the Mitchell Ventures syndicate on AngelList here: https://angel.co/mitchell-ventures/syndicate
The Top 10 Companies I’d Invest In
**Credit to TechCrunch for their descriptions of the companies below**
- Alpha Vantage— APIs for All Financial Market Data
TechCrunch Description: Alpha Vantage provides affordable, low-friction API access to financial market data including stocks, currencies, cryptocurrencies, and quantitative trading signals. These APIs allow developers to create digital assets such as iOS/Android apps and assist investors with trading decisions. Alpha Vantage has 100,000+ registered users making 300 million+ API requests on a daily basis.
Why I Would Invest: You don’t have to look too far to see that the world of Finance has been massively changed by technology. Whether it’s the multi-billion-dollar valuation Robinhood app or billion-dollar robo-advisors Wealthfront or Betterment, tech has taken over Finance.
Alpha Vantage makes a wealth of financial data significantly more accessible and affordable to developers building new financial algorithms, apps, or data streams. And we’ve seen what happens when a startup packages previously difficult to access data in a nice, tidy, API (Checkr, Lob, Stripe, etc.)
2. Scanwell Health— At Home Urine Testing App
TechCrunch Description: Scanwell Health has created the first and only FDA-cleared urine testing app. They allow anyone to test at home by taking a picture of a test strip for instant clinical grade results. Their first test provides on-demand relief for urinary tract infections. Using Scanwell, anyone can test their urine in 3 minutes and receive a prescription for antibiotics the same day.
Why I Would Invest: It is 2018. Why do I need to go to the doctor to take a simple urine test? This is not only inefficient, it’s expensive. The cost of my test not only includes the testing materials and lab time, but also the rent for the physical space and the doctor or PA’s time. Plus, on top of all of that, it’s usually slow to receive results!
While Scanwell is starting with a relatively narrow use case (UTIs), I’m optimistic they can keep expanding the tests they offer and own this new market. Their FDA approval is a major early win too.
3. Goodly— Student Loan Repayment as an Employee Benefit
TechCrunch Description: Goodly makes it easy for companies to offer student loan repayment as an employee benefit. This helps them recruit and retain top talent and improve diversity and inclusion. Women hold two-thirds of student debt and owe half a trillion dollars more in student debt than their male colleagues. African American employees hold 31% more student loan debt than their white peers, and LGBTQ student loan borrowers owe 17% more than the general population. An employer contribution of less than the cost of a cup of coffee per day will help the average employee pay off their student loans 8.5 years faster than they otherwise would.
Why I Would Invest: I’ve written before about the crazy spending habits of my fellow Millennials (See: Open Financial Letter to Millennials). The amount of debt we’ve managed to accumulate at such an early age is daunting.
We need creative solutions like Goodly to help us pay down this debt more quickly. Wrapping loan repayment into an employee benefit is a brilliant idea.
Employees with lower amounts of debt will be less stressed and more successful at their jobs. Additionally, its highly likely that companies with this benefit will retain Millennial employees longer. Win. Win.
4. CSPA— Standardized Exam for Software Engineers
TechCrunch Description: CSPA (Computer Science Proficiency Assessment) designs and administers a standardized exam for software engineers. It’s essentially the SAT for software engineers. Tests are held in classrooms on or near college campuses. The CSPA tests both academic and practical topics. Students sign up and pay to take the exam, and the assessment results are shared with employers. So far, there are over 60 companies using CSPA. As the founder and head of engineering at his previous startup, Crunchyroll, James Lin felt the pain of trying to hire great engineers. He spent a ton of time not only interviewing candidates, but also creating the interview questions. CSPA is his solution to that.
Why I Would Invest: Now that I’ve worked for 3 different technology companies, I can see the great value in something like the CSPA. There is no existing standard to evaluate computer science majors from different schools (or even different countries) on. So companies have been left to create their own questions and programming tests, which is time consuming and difficult.
I’m a little skeptical that the CSPA will have a role beyond the initial filtering step of candidates, but I’m optimistic that the team behind the test will find ways to offer additional, company or industry-specific supplemental tests. Think of the relationship between SAT subject tests and the generic SAT test.
5. Inscribe— Forgery Identification as an API
TechCrunch Description: Using a web platform and APIs, Inscribe is pitching a service to identify digital forgeries in documents. The company’s technology uses image forensics and machine learning to check documents like bank statements, tax forms and forms of state and national identification to look for tampered names, figures, text or signatures. The killjoys at Inscribe may finally get rid of the fake ID, but they’re also solving a billion-dollar market in online fraud..
Why I Would Invest: Fraud is a problem that isn’t going away any time soon and it’s going to perpetually become more sophisticated. Almost every consumer-facing online business will need to be able to programmatically judge the authenticity of documents uploaded by their users (think: banks, insurance companies, utilities, lending companies).
Inscribe is well-positioned to provide this increasingly valuable service, for a fee.
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6. Togg— Assisted Living Sensors to Monitor Health Changes
TechCrunch Description: Togg’s product is now installed in four assisted living centers around the U.S. and is able to capture more accurately than actual caregivers at a facility changes in residents’ health, including sleep, breathing, bathroom visits and movement speed.
The founders have been developing this home sensing product since 2016. Given the explosion in the number of elderly in need of home care it seems like Togg is a product hitting the market at the right time..
Why I Would Invest: I’m a huge believer in investments that align with a major demographic trend. It’s no secret that assisted living is expanding rapidly as the baby boomer generation fully hits their 60s-80s.
Togg’s approach is interesting because it both provides a high degree of value (identification of dangerous trends in health/behaviors) and also has the potential to dramatically reduce costs (fewer caregivers) for this growing population. I’d also imagine that Togg could expand this technology beyond the geriatric population to cover hospitals for all ages as well.
7. Berbix— Identity Verification as a Service
TechCrunch Description: Collecting and identifying photo identification becomes a breeze with Berbix, a company that’s aiming to make what amounts to Stripe for identity verification. The company has developed an integration with its software so that companies can cut costs and deter fraud. Founded by two former product and engineering leaders for trust and safety at Airbnb, they’re trying to build identity verification for all kinds of peer-to-peer marketplaces and online platforms, which they see as a $10 billion opportunity (at least)..
Why I Would Invest: I’m a strong believer in Identity Verification as a Service. As data breaches become more and more sophisticated (and common), it’s essential that we continue to innovate on how to assess a true identity before providing access to valuable information.
This is also why I included Veriff.me (a very similar company) in my W18 list! In my opinion, there is plenty of market opportunity to go around for now between Berbix and Veriff.me!
8. Kyte— Spam Blocking for Indian SMS
TechCrunch Description: Kyte is a smart SMS app that blocks spam and automatically organizes your inbox. It is intended for the Indian market where SMS is the primary mode of communication for finance and commerce transactions and 60% of messages are spam. SMS alerts usage in India has exploded over the last three years and spam remains an unsolved problem.
Why I Would Invest: Imagine if 60% of your email box was spam. Thankfully, Gmail and other major email clients have invested serious machine learning resources in separating junk mail from the mail we actually care about.
No one has done that hard work in India for SMS, until now. Kyte looks like an email client, but is built on top of SMS. While Kyte may not grow into a unicorn with this spam-filtering idea alone, they’re likely to be a great acquisition target as they continue to improve their technology and their solution to this pervasive problem.
9. OKCredit— Credit for SMBs in India
TechCrunch Description: OKCredit helps small and mid-size businesses in India — the world’s largest base of SMBs — which extend $500 billion of credit to consumers every year…on paper. OKCredit digitizes their transactions and records payment, reducing the burden of these businesses that are currently maintaining and accounting paper account books.
It appears to have struck a chord. Already the company is working with 15,000 businesses, and it hasn’t spent any money on marketing it says. As for the need it’s addressing, it says it’s a $300 billion market..
Why I Would Invest: Demographics, demographics, demographics! India already has the most SMBs in the world and they are growing in wealth and financial needs each and every day.
OKCredit is well-positioned to help these businesses better track the credit they extend to customers on a daily basis. The existing paper-based system in India is no match for the wave of modernization sweeping across the country.
10. Cambridge Glycoscience— Sugar Substitutes that are (actually) like Sugar
TechCrunch Description: Looking to bake the perfect treat with a sugar substitute that can mimic not just the sweetness, but the gooey caramelization and sticky sweetness that typically only comes from real sugar? Well, YC company Cambridge Glycoscience has the sweetener for you. The company expects to produce its sugar substitutes at a cost that can make low- and no-sugar foods even more accessible for mainstream consumers. So toss that corn syrup and get ready for a new flavor revolution.
Their manufacturing process will let them produce their sugar substitute at scale and they have a patent portfolio to protect their innovation. Notably, they have signed letters of intent with five companies already, including Haribo.
Why I Would Invest: Cambridge Glycoscience is difficult to assess without seeing (and tasting!) the product myself. However, their early LOIs with several major companies are encouraging.
If they can produce the holy grail: a sugar substitute that tastes and behaves like sugar, they have a multi-billion dollar opportunity on their hands (and in their dough). Furthermore, they have the chance to dramatically reduce the incidence of diabetes, which kills over 2MM people each year.
Honorable Mentions
Grabb-it Inc. — turns rideshare cars into digital billboards.
Mutiny — helps SaaS companies personalize their website for each visitor to close more sales.
Seattle Food Tech — looks to create what effectively looks and feels like a chicken nugget out of plant-based food — all the way down to the puff it gets in an oven.
How Have My Picks from YC W18 Done?
It’s been less than 5 months since I wrote about the W18 YC class! After 4 more months, I’ll do an update on how those companies are doing.
Interested in Investing in Startups Like These?
Check out the Mitchell Ventures syndicate on AngelList here: https://angel.co/mitchell-ventures/syndicate
More from Alex Mitchell on Medium
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