Thesis

Led by YC alumni and investors David J. Phillips and Nate Matherson, the S23 Capitalize Fund aims to invest in the top 10-25% of companies in Y Combinator’s Summer ‘23 batch.

Overview

Y Combinator is the most prestigious startup accelerator in the world. It has funded 3.5k+ companies, including Airbnb, Stripe, Cruise, DoorDash, Coinbase, Dropbox, Instacart, Quora, Reddit, and Twitch. YC interviews and selects two batches of companies per year. The combined valuation of all YC companies nears $600B, including 90+ companies worth $1B+, and 16 public.

Typically only well-connected investors are able to write checks for what they believe could be "the next Airbnb" — in fact, accredited investors line up days before the batch ends to secure an allocation in these hot companies.

LPs in the fund will get access to multiple deals across different industries in Y Combinator’s Summer ‘23 batch. We hired two top YC founders and investors to vet companies in this batch and invest the fund into the top quartile of startups.

Fund Managers

• David J. Phillips is the CEO and founder of Fondo (W18), the number one accounting platform for YC companies. David is an angel investor in 30+ startups, including top YC companies Rippling, Flexport, Armory, Career Karma, Yummy, and Treinta. David was previously the co-founder & CEO of Hackbright Academy, where he bootstrapped the coding boot camp until it got acquired by Capella Education (NASDAQ:CPLA).
• Nate Matherson is a 2x founder and YC alum: LendEDU (W16) was acquired, and Positional (S21) is still active. Nate is an angel investor in over 40 YC startups. Nate invests almost exclusively in YC companies and focuses on SaaS, dev tools, and fintech. He runs a rigorous process during each YC batch cycle, working to invest in the best companies from each batch before Demo Day. Nate has invested in several top YC companies, including Karbon, Yummy, and Moonshot Brands.

All funds invested will be split between the two fund managers. 

Investment Strategy

1. David and Nate will invest across multiple industries, including generative AI, fintech, healthcare, consumer, enterprise analytics, security, and infrastructure.
2. Anticipated check sizes will be between $25K-$100K with a total of 20-40 investments, depending on the final fund size.
3. David and Nate will begin identifying companies and making investments well in advance of YC Demo Day, to secure allocations early and take advantage of favorable pre-Demo Day terms.
4. David and Nate will attempt to identify the best companies in the Summer ‘23 batch. They will make decisions to maximize the long-term value of the fund, with the aim of providing the best returns possible for investors.

Access and Track Record

One of the key advantages of investing in the S23 Capitalize Fund is the team's reputation within Y Combinator, giving us excellent access to investments.

• David and Nate are both serial founders. They have been through YC’s program and have been investing in YC startups for years.

  

  

• Wefunder (Capitalize’s parent company) is a YC alum (W13). We have also hosted 125+ fundraises for YC companies on Wefunder and Capitalize.

  

• YC founders love us as investors.
• Wefunder has an "A" rating on YC’s Bookface (their internal knowledge base), with a total of 122 investments
• W23 Capitalize Fund had 100% “A” ratings from YC founders with 35 investments
• We have a long history of raising YC batch funds.
• Capitalize’s Winter ‘23 Fund was incredibly successful, raising over $1M in two weeks. The fund was deployed into 37 companies alongside top investors like Sequoia, a16z, Initialized Capital, co-founder of YC, and many more
• Wefunder has raised 5 YC “batch funds” including investments in:

And others:

• Mashgin. $1.5B Valuation | $62M Series B by NEA, A* Capital
• Boom Supersonic. $1.21B Valuation | $100M Series C by Bessemer
• ShipBob. $1.12B Valuation | $200M Series E by Bain Capital, Menlo Ventures, SoftBank
• Teleport. $1.1B Valuation | $110M Series C by Bessemer, Insight Partners, Kleiner Perkins
• Gecko Robotics. $553M Valuation | $73M Series C by Founders Fund, Marc Cuban
• Apollo. $910M Valuation | $110M Series C by Sequoia
• Eight Sleep. $387M Valuation | $87.5M Series C by Founders Fund, Khosla, SoftBank
• Plate IQ. $330M Valuation | $160M Series B by FTV Capital
• Zenefits. Acquired by TriNet Group (NYSE: TNET)
• Final. Acquired by Goldman Sachs (NYSE: GS)
• Outbound. Acquired by Zendesk (NYSE:ZEN)
• Worklife. Acquired by Cisco (NASDAQ:CSCO)
• Circle Medical. Acquired by Well Health Technologies (OTC:WHTCF)
• Interviewed. Acquired by Indeed
• Second Measure. Acquired by Bloomberg

Alongside some notable co-investors:

Admin, Reporting & Fees

• Admin. The fund will be administered by the Capitalize team, including Nick Tommarello, Mattia Astori and Adrian Parlow.
• Reporting. We will provide LPs with regular performance updates on our investments asynchronously via email.
• Distributions. Distributions to LPs happen following each individual liquidity event.
• Fees. The fund charges 20% carried interest and a yearly management fee of 1%.
• Minimum Investment: $5,000.

Where to Invest

Join the S23 Capitalize Fund and looking forward to working together.

* Not endorsed by or affiliated with YC