| Type | Limited liability company |
|---|---|
| Industry | Venture Capital |
| Founded | March, 2005 |
| Headquarters | Mountain View, CA |
| Key people | Paul Graham, Trevor Blackwell, Paul Buchheit, Jessica Livingston, Robert Morris, Harj Taggar |
| Products | Investments |
| Website | http://www.ycombinator.com/ |
Y Combinator is an American seed-stage startup funding firm, started in March 2005. Y Combinator provides seed money, advice, and connections at two 3-month programs per year. In exchange, they take an average of about 6% of the company's equity.[1]
Compared to other startup funds, Y Combinator provides very little money ($14,000 for startups with 1 founder, $17,000 for startups with 2 founders, and $20,000 for those with 3 or more[2]). This reflects co-founder Paul Graham's theory that between free software, dynamic languages, the web, and Moore's Law, the cost of founding an information technology startup has greatly decreased.[3] Wired has called Y Combinator a "boot camp for startups" and "the most prestigious program for budding digital entrepreneurs."[4]
The firm is named after a construct in the theory of functional programming called the "Y combinator".[5]
The average valuation of a Y Combinator-backed company, according to co-founder Paul Graham, is $22.4 million.[6]
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The program consists of weekly dinners where notable guests come to speak to the batch of companies. The dinners last for the duration of the three month program, but all founders have the life-long ability to book office hours with the Y Combinator venture partners.
At the end of the program Y Combinator holds Demo Day, where top Silicon Valley angel investors and venture capital firms come to watch the companies present. Attending investors range from VC firms like Sequoia Capital to celebrity angel investors like Ashton Kutcher.
The application process consists of a written application and a 10 minute in-person interview where Y Combinator flies the team members to Mountain View at YC's expense. While it's strongly recommended by the program for companies to have at least two founders, single founders have also been funded in extremely rare circumstances.
The acceptance rate is between 2.5% and 3.5%.[7]
From its inception to 2008, one program was held in each of the US cities of Cambridge, Massachusetts and Mountain View, California; in January 2009, Y Combinator announced that henceforth the Cambridge program would be closed and all future programs would take place in Silicon Valley.[8]
In 2009, Y Combinator partnered with Sequoia Capital and angel investors such as Ron Conway, Paul Buchheit and Aydin Senkut to further the support of the young startups with increased funding.[9]
Starting in 2011, Yuri Milner and SV Angel offer every Y Combinator company a $150,000 convertible note investment.[10]
Late that year, in response to widespread support for the Stop Online Piracy Act (SOPA) pending in the U.S. Congress, Graham announced that no representative of any company supporting it would be welcome at Y Combinator's Demo Days, and urged startups the company was already supporting to boycott SOPA supporters as well.[11]
Y Combinator was founded in March 2005 by Paul Graham with his Viaweb cofounders Robert Morris and Trevor Blackwell, as well as Jessica Livingston who later became his wife. In early 2010, Harj Taggar, cofounder of Y Combinator-funded Auctomatic joined as an advisor. In September 2010, Alexis Ohanian, cofounder of Y Combinator-backed Reddit, joined as "Ambassador to the East (Coast)".[12] In November 2010, Gmail creator Paul Buchheit and Taggar were named partners.[13] In January 2011, Y Combinator-backed Posterous cofounder Garry Tan joined as designer-in-residence.[14]
As of June 2011, Y Combinator had funded 316[15][16] startups. The number of startups funded in each cycle has been gradually increasing. The first cycle in summer 2005 had eight startups. In the summer 2011 cycle, there were more than 60.
Some of the better-known funded companies include: Scribd, reddit, Airbnb, Dropbox, Disqus, and Posterous.[2]
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