Like most Silicon Valley VCs, what Garry Tan sees is opportunities for new, huge, lucrative businesses.
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Y Combinator is renowned in Silicon Valley for a lot of reasons, but there’s one service that has quietly become one of its most powerful: an online founder-matching tool.
“I think this is the most valuable digital product that YC has built (i.e. more valuable than Bookface, etc,). It’s astonishing how many founders I meet who met each other on the YC co-founder matching platform,” tweeted seed investor Nikhil Basu Trivedi. (Bookface refers to YC’s famed online collection of how-to startup advice for its program participants.)
Recent Y Combinator grad Hona is an example, although its founders’ meet-cute story is a bit more exciting than just using that tool.
Hona is a GenAI medical records startup. It integrates into multiple electronic records systems and then summarizes a patient’s medical records, helping doctors prep for the patient’s visit.
It was initially founded by two friends who have known each other since middle school, Danielle Yoesep and Adam Steinle. They reconnected after graduating college and respective early careers in tech and biotech. Steinle had been a biomedical engineer, Goldman banker, and big tech product manager at Facebook. Yoesep was a scientist for a biotech startup that had just been acquired. They were hanging out with their high school friends while home for Thanksgiving, chatting about wanting to do a startup when the idea for Hona arose. While neither of them were doctors themselves, both had family members who were doctors or in healthcare and they soon settled on an idea: AI to assist doctors with patient data summaries.
They knew they needed an AI specialist co-founder, so signed up on the Y Combinator Co‑Founder Matching Platform. They found one in Shuying Zhang, who also knew she wanted to do a startup, something in healthcare and AI, and had signed up on the service. Zhang’s background combined biomedical engineering and software development, most recently working on AI at Google, and she was at Amazon prior to that.
What came next was a process that sounds a bit like Tinder for co-founders.
Yoesep and Steinle swiped through profiles in the matching tool as did Zhang. Each of them held several meet-and-greets with potential co-founders. When Zhang met with Yoesep and Steinle, they instantly clicked so well, that the long-time friends offered Zhang a full one-third share of the company.
“We literally met each other and like three weeks later, we’re jobless, trying to build this,” Steinle told TechCrunch.
Having met on Y Combinator, with their backgrounds in tech, they were exactly the type of startup sure to be accepted into the competitive program. They immediately applied to YC for the Summer 2023 batch.
And they were promptly rejected.
So they got to work on their own, building a prototype, showing it to their network of doctors, earning solid reviews, and raising a small seed round.
About four months later, they applied to YC again for the winter 2024 batch, and were accepted. One of the reasons they got in the second time, Yoesep recalled, was that they never changed directions, or never pivoted, to use the hackneyed Silicon Valley term. Another reason was “because of our dynamic during our interview, showing that we had grown close and enjoyed working together,” she said.
Things started cooking for them after that. Medical doctors at Duke and Harvard agreed to test the product and write a white paper, due to publish later this month. Some angels who were known in the tech and biotech worlds invested. And by the time Hona graduated from YC and did its famed Demo Day, it had already raised a $3 million seed round from General Catalyst (which is pursuing healthtech so seriously it bought a hospital system), Samsung, Rebel Fund (founded by Reddit co-founder Steve Huffman and Cruise co-founder Daniel Kan) and 1984 Ventures.
Hona still has a tough road ahead. AI for medical transcription is an increasingly crowded field. Big cloud providers like Google and Amazon are offering such tools and dozens of startups are tackling it, too.
But Steinle says that Hona will compete because it’s “super customizable” to search through medical records for the specific data a particular doctor needs prior to seeing a patient. A cardiologist would get a different summary than a nephrologist. For instance, the upcoming white paper is on kidney stone referrals, so “so we’re pulling stuff like how many millimeters was the stone on the right here?” Steinle describes.
As for Zhang, her advice for others who dream of doing a startup, and are considering using YC’s matching tool, is to “just go out and try,” she says. “Once you start working with people, you will quickly have a good sense whether you get along. You will know right away.”
Cross-border fintech is hot right now. The cross-border payments market is forecasted to reach over $250 trillion by 2027, according to the Bank of England. And experts say fintechs are giving banks a run for their money (pun intended) here, especially in the business-to-business sector where artificial intelligence, machine learning and blockchain come into play — all emerging technologies fintechs love.
So it’s no surprise that one of the trends among Y Combinator’s Winter 2024 batch of nearly 30 fintech startups is how to more easily move money globally. Here’s a rundown of what I saw during this week’s YC Demo Day:
Numo’s verified profile is attached to each invoice sent. Image Credits: Numo
What it does: Offshore bank for international contractors
Numo focuses on payroll systems and banking for remote and international contractors. Users get a U.S. bank account and access to low-cost local payment rails. CEO Derrick Wolbert met co-founders Reuben Balik and Q Carlson while at Hologram.com, a global cellular network. Wolbert said the company “stitched together the best carriers in each market” so that users can withdraw their funds instantly in their local currency. The startup tested this first in Nigeria and already has 1,000 users signed up and 330 contractors who were verified by Numo. Wolbert called Numo “financial infrastructure for the new generation of tech workers.”
Image Credits: Cleva
What it does: U.S.-based banking for Africa
Similar to Numo, Cleva provides a U.S. bank account where users, even those who are non-residents, can receive funds and then convert them into their local currency. Co-founder Tolu Alabi previously built cross-border issuing and banking products at Stripe, while co-founder Philip Abel built multi-region infrastructure at companies, including AWS and Twilio. Alabi said that one of the drivers for the startup was the fact that about 70% of people in Nigeria lost their wealth last year due to currency devaluation. With Cleva, “Africans can receive dollars from anywhere in the world,” Alabi said. This market is quite large, $18 billion, she said. There’s really no bigger proof of the market like reaching profitability, and that’s exactly where Cleva is — six months after launch. It is also generating $120,000 in monthly revenue.
Image Credits: xPay
What it does: International payments API for businesses in India and Southeast Asia
xPay acts as an international reseller and enables merchants to “start selling internationally right away, without a U.S. bank account or entity,” CEO Aniket Gupta said. The company touts that it can help companies sell into the U.S., Europe, Middle East and Southeast Asia with one integration and in “one-tenth” the time. xPay launched four weeks ago and already has 25 signed contracts and more than 200 people on the waiting list. Could this be a potential future Stripe acquisition? We’ll have to wait and see. But for now, the company expects to process $5 million in annualized transaction volume by the end of the month.
Image Credits: Swift
What it does: Instant money movement anywhere in the world
Moving money from account to account still takes days, so two engineers, David Lalor and Rakeeb Hossain started Swift to provide a “unified API for risk-free instant funding,” according to the company. They are building instant account-to-account international transfers to speed up the flow of over $150 trillion that goes through banking rails each year. Swift’s first product is an instant deposit API for brokerages and digital banks that is already running on Venmo, Zelle and FedNow.
Image Credits: Infinity
What it does: Cross-border banking for small businesses in India
We heard from a lot of childhood friends during the past two days, so it was refreshing to see two siblings form a company. In fact, for Sourav Choraria and his brother, Sidharth Choraria, this is their second startup together after a health tech startup they sold. Sourav is the former head of growth at wealth management giant Paytm Money, and Sidharth is a former project manager at Amazon who helped launch its Appstore’s in-app purchase SDK.
Now the pair is building in the fintech space with Infinity. The company built a treasury management platform and is now adding multi-currency accounts and global payments. Businesses in India account for $700 billion in cross-border trades per year, and Infinity makes 1% from those transactions. That $7 billion prospect translates into a huge opportunity. In three months, Infinity secured 110 customers and is growing 20% week over week, according to Sourav.
“Our goal is to create a financial oasis for cross-border companies,” Sourav said.
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