Y Combinator will let founders receive funds in stablecoins
Y Combinator, the influential startup incubator, is now allowing founders to receive their seed funding in stablecoins like USDC, a move that signals growing mainstream adoption of digital currencies in venture capital. This decision has sparked intense debate among Hacker News users, who are weighing the practical benefits for international transactions against the inherent risks and historical skepticism surrounding crypto investments. The discussion highlights a fundamental tension between financial innovation and prudent startup management, echoing past controversies around YC's involvement in the crypto space.
The Lowdown
Y Combinator, a leading Silicon Valley startup accelerator, has announced that founders in its upcoming cohort can opt to receive their initial funding—typically around $500,000—in USDC stablecoins. This initiative allows founders to choose various blockchains like Ethereum and Solana for token receipt, with potential expansion to other stablecoins. Nemil Dalal, a YC visiting partner focusing on crypto, emphasized that stablecoins are a "key pillar" for the incubator and a space they actively want to support.
- This move differentiates YC from traditional VCs who typically don't offer stablecoin funding, signaling a belief that more startups will eventually raise capital "on-chain."
- While stablecoins historically served crypto traders seeking non-volatile assets, they are increasingly viewed by Wall Street and corporations as a faster and more cost-effective way to move money globally.
- Major tech players like Stripe, Cloudflare, and Klarna have already made significant moves into the stablecoin space, with acquisitions or new product launches, especially following recent US legislation regulating crypto assets.
- Despite a recent bearish turn in the broader crypto market, YC believes the "excitement on stablecoins is just growing" and is "agnostic of prices," focusing on their utility rather than speculative value.
Ultimately, Y Combinator's decision reflects a forward-looking stance on digital currencies, aiming to integrate stablecoins into the core mechanics of startup funding and operations, even as the wider tech community remains divided on their true utility and risks.
The Gossip
Prudent Pursuits vs. Pioneering Payments
Many commenters debated the wisdom of YC's stablecoin move, with a strong contingent arguing that startups should avoid financial innovation and stick to "boring," proven methods for managing funds to minimize risk and distraction. They pointed to the Silicon Valley Bank (SVB) collapse as a reminder of financial instability. Conversely, proponents highlighted potential benefits such as lower international transfer fees, better interest rates, and the ability to pay remote employees more efficiently, especially for startups operating in less stable economies. Some also argued that embracing new financial rails could itself be a competitive advantage for certain businesses.
Skeptical Scrutiny of Stablecoins
A significant portion of the discussion centered on deep skepticism regarding stablecoins and YC's continued embrace of the crypto space. Critics questioned the actual benefits for US-based startups, suggesting it's "crypto for the sake of crypto" and a way for YC to further its crypto investments. Concerns were raised about the transparency and true backing of stablecoins, with references to historical "free banking" eras where private currencies often failed. Some commenters also associated crypto with illicit activities like money laundering and scams, pointing to past YC-funded crypto projects that went awry.
YC's (Perceived) Political Posturing
A more conspiratorial vein of comments explored potential political or self-serving motivations behind YC's stablecoin adoption. Some users speculated about YC's shifting political affiliations, linking the move to broader US crypto legislation and the involvement of former Trump administration figures. Others suggested a "circular funding" model, where YC invests in crypto, then encourages its startups to use crypto services, thereby funneling money back into the ecosystem. There was also discussion about how stablecoins might be attractive to founders worried about the stability of fiat currencies or seeking to circumvent traditional banking systems.