Daniel Gross is here for the underdogs. His accelerator, Pioneer, is on a mission to democratize the startup funnel for tech talent whose background or geographical location places them far from the usual funding streams. “The way our incentives are set up, we won’t be able to fund the Stanford postdoc who’s working on a machine learning company,” he says. “We’re here to appeal to people that are weird and different, and we’re strong believers that tomorrow was made by those that didn’t fit in.”
You might say he’s looking for himself. Gross was 18 when he left Israel in 2010 to become the youngest founder (at that time) to be accepted into Y Combinator. “The life I was going to lead was scheduled to be pretty different from the one that I ended up leading,” Gross says. “And that was the result of a relatively small intervention of starting a business and coming to Silicon Valley.” Pioneer’s accelerator has likewise accepted aspiring entrepreneurs from Argentina to South Africa, some of whom entered Pioneer before developing any semblance of a business. In some cases, Gross has even stepped in to help would-be founders register business entities in Delaware.
In that sense, Gross, who was a partner at Y Combinator prior to starting Pioneer in 2018, has positioned his new venture as an “X Combinator.” He’s now announcing a formalization of Pioneer’s terms that draws even more parallels to the comparison. Where his former employer invests $125,000 in return for a 7% slice of equity in its accelerator companies, Pioneer will now offer either $20,000 in exchange for 2% ownership, or no money—but the opportunity to join Pioneer’s accelerator network and receive mentorship—for 1%, as first reported in the Midas Touch newsletter.
“What we’ve learned is that $20,000 is the minimum effective dose of capital required for a business to get to another key milestone,” Gross says. That’s the amount, he adds, that allows a startup to build a minimum viable product, hire an employee or two, get an AWS account or fly out to Silicon Valley and start selling its product. “It is enough for you to take the first step in making the next Google, Facebook, Stripe or Instacart.”
Pioneer hasn’t produced any companies of that caliber, but three years in, it has demonstrated promise. The roughly 130 companies it backed with funds have collectively gone on to raise more than $100 million from investors including Sequoia, General Catalyst and Y Combinator. They include cryptocurrency startup Iron Fish, which raised $27 million in a Series A led by Andreessen Horowitz last month, and Roboflow, a Des Moines, Iowa-based computer vision firm which raised $20 million in an A round led by Craft Ventures in September. Pioneer has begun dabbling into seed funding too, its largest investment being north of $1 million in Banana ML, a machine learning tool for developers. “Our business model really hinges on not most companies doing well, but a small number of them doing phenomenally well,” Gross says. “As long as we’re able to capture ten, 20 or 30 of the ones that work will be just fine.”
Gross doesn’t have a specific target for how many businesses Pioneer plans to invest in. It has backing from the investor Marc Andreessen and the fintech company Stripe, though Gross would not share how much capital the investors have contributed. Pioneer is structured not as a venture fund, Gross says, but as an operating business, much like the startups it has backed. In true startup fashion, Pioneer has iterated its own product, an automated app (informed by Gross’ background leading machine learning efforts at Apple, which acquired his Y Combinator startup Cue in 2013) that screens for potential accelerator companies.
Entry into its accelerator comes via a free-to-join, gamified app in which developers and aspiring entrepreneurs enter their tech projects into a “tournament.” Taking a page from gaming leaderboards, Pioneer uses a points system which ranks projects on self-submitted metrics like website engagement, user reviews and the amount of code being written. Progress and momentum catapults participants towards the top of the leaderboard; the top 50 each week are reviewed by Pioneer’s team, with the potential to receive backing.
“The tournament is the most valuable part of Pioneer,” says Erik Dunteman, the founder of Banana ML. “It was gamified in a perfect way to make me want to log in and give my updates and build in public. I was tracking my spot on the leaderboard.”
For Karen Serfaty, founder of sales software startup Palabra.io, Pioneer was the very reason she was able to become a tech entrepreneur. After rising the ranks of the tournament, Serfaty joined Pioneer’s community formally in April 2020. At the time, she did not know any investors and Palabra was only a project she was building from her living room in Argentina. During a virtual demo day at the end of the Pioneer program, Serfaty met investor Jason Calacanis, who invited her to his Launch Accelerator. From there, she closed her first venture round and grew the Palabra team to ten people.
“I’ve been following startups and looking at Y Combinator for a couple years. It’s something I care about, but it’s always been so far away from me. I’m from a country that’s extremely far away from there,” says Serfaty, who has now secured a visa to move to Los Angeles next month. “[Pioneer] opened doors for me that were not near anything that I had known.”