Y Combinator
Encyclopedia
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.
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). 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. Wired
has called Y Combinator a "boot camp for startups" and "the most prestigious program for budding digital entrepreneurs."
The firm is named after a construct in the theory of functional programming called the "Y combinator
".
The average valuation of a Y Combinator-backed company, according to co-founder Paul Graham, is $22.4 million.
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 acceptance rate is between 2.5% and 3.5%.
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
.
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.
Starting in 2011, Yuri Milner and SV Angel offer every Y Combinator company a $150,000 convertible note investment.
, 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)". In November 2010, Gmail
creator Paul Buchheit
and Taggar were named partners. In January 2011, Y Combinator-backed Posterous cofounder Garry Tan joined as designer-in-residence.
Some of the better-known funded companies include: Scribd
, reddit
, Airbnb
, Dropbox
, Disqus
, and Posterous
.
Startup company
A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets...
funding firm, started in March 2005. Y Combinator provides seed money
Seed money
Seed money, sometimes known as seed funding, friends and family funding or angel funding , is a securities offering whereby one or more parties that have some connection to a new enterprise invest the funds necessary to start the business so that it has enough funds to sustain itself for a period...
, advice, and connections at two 3-month programs per year. In exchange, they take an average of about 6% of the company's equity.
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). This reflects co-founder Paul Graham's theory that between free software
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...
, dynamic languages
Dynamic programming language
Dynamic programming language is a term used broadly in computer science to describe a class of high-level programming languages that execute at runtime many common behaviors that other languages might perform during compilation, if at all...
, the web, and Moore's Law
Moore's Law
Moore's law describes a long-term trend in the history of computing hardware: the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years....
, the cost of founding an information technology startup has greatly decreased. Wired
Wired (magazine)
Wired is a full-color monthly American magazine and on-line periodical, published since January 1993, that reports on how new and developing technology affects culture, the economy, and politics...
has called Y Combinator a "boot camp for startups" and "the most prestigious program for budding digital entrepreneurs."
The firm is named after a construct in the theory of functional programming called the "Y combinator
Y Combinator
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...
".
The average valuation of a Y Combinator-backed company, according to co-founder Paul Graham, is $22.4 million.
Program
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
Sequoia Capital
Sequoia Capital is a Californian venture capital firm located on Sand Hill Road in Menlo Park, California. The Wall Street Journal has called Sequoia Capital "one of the highest-caliber venture firms", and noted that it is "one of Silicon Valley's most influential venture-capital firms"...
to celebrity angel investors like Ashton Kutcher
Ashton Kutcher
Christopher Ashton Kutcher , best known as Ashton Kutcher, is an American actor, producer, former fashion model and comedian, best known for his portrayal of Michael Kelso in the Fox sitcom That '70s Show...
.
Application Process
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%.
History
From its inception to 2008, one program was held in each of the US cities of Cambridge, MassachusettsCambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
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
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
.
In 2009, Y Combinator partnered with Sequoia Capital
Sequoia Capital
Sequoia Capital is a Californian venture capital firm located on Sand Hill Road in Menlo Park, California. The Wall Street Journal has called Sequoia Capital "one of the highest-caliber venture firms", and noted that it is "one of Silicon Valley's most influential venture-capital firms"...
and angel investors such as Ron Conway
Ron Conway
Ron Conway is an American angel investor, often described as one of the "super angels". Conway is recognized as a strong networker and is based in Silicon Valley.-Early career:...
, Paul Buchheit
Paul Buchheit
Paul Buchheit is an American computer programmer and entrepreneur. He was the creator and lead developer of Gmail. He developed the original prototype of Google AdSense as part of his work on Gmail. He also suggested the company's now-famous motto "Don't be evil" in a 2000 meeting on company values...
and Aydin Senkut to further the support of the young startups with increased funding.
Starting in 2011, Yuri Milner and SV Angel offer every Y Combinator company a $150,000 convertible note investment.
People
Y Combinator was founded in March 2005 by Paul Graham with his Viaweb cofounders Robert Morris and Trevor BlackwellTrevor Blackwell
Trevor Blackwell is a computer programmer, engineer and entrepreneur based in Silicon Valley.Blackwell is a developer of humanoid robots. He is also the inventor of the Eunicycle, essentially a one-wheeled Segway. Dr. Blackwell is the founder and CEO of Anybots and a partner at Y Combinator.- Life...
, as well as Jessica Livingston
Jessica Livingston
Jessica Livingston is an author and a founding partner of the seed stage venture firm Y Combinator. She also organizes Startup School. She has a B.A...
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
Reddit
reddit is a social news website where the registered users submit content, in the form of either a link or a text "self" post. Other users then vote the submission "up" or "down," which is used to rank the post and determine its position on the site's pages and front page.Reddit was originally...
, joined as "Ambassador to the East (Coast)". In November 2010, Gmail
Gmail
Gmail is a free, advertising-supported email service provided by Google. Users may access Gmail as secure webmail, as well via POP3 or IMAP protocols. Gmail was launched as an invitation-only beta release on April 1, 2004 and it became available to the general public on February 7, 2007, though...
creator Paul Buchheit
Paul Buchheit
Paul Buchheit is an American computer programmer and entrepreneur. He was the creator and lead developer of Gmail. He developed the original prototype of Google AdSense as part of his work on Gmail. He also suggested the company's now-famous motto "Don't be evil" in a 2000 meeting on company values...
and Taggar were named partners. In January 2011, Y Combinator-backed Posterous cofounder Garry Tan joined as designer-in-residence.
Notable portfolio companies
As of June 2011, Y Combinator had funded 316 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
Scribd
Scribd is a Web 2.0 based document-sharing website which allows users to post documents of various formats, and embed them into a web page using its iPaper format. Scribd was founded by Trip Adler, Tikhon Bernstam, and Jared Friedman in 2006...
Reddit
reddit is a social news website where the registered users submit content, in the form of either a link or a text "self" post. Other users then vote the submission "up" or "down," which is used to rank the post and determine its position on the site's pages and front page.Reddit was originally...
, Airbnb
Airbnb
Airbnb is an online service that matches people seeking vacation rentals and other short-term accommodations with those with rooms to rent, generally private parties that are not professional hoteliers. The site was founded in August 2008 by Brian Chesky and Joe Gebbia. In July 2011, the company...
, Dropbox
Dropbox (storage provider)
Dropbox is a Web-based file hosting service operated by Dropbox, Inc. that uses cloud storage to enable users to store and share files and folders with others across the Internet using file synchronization. It was founded in 2007 by MIT graduates Drew Houston and Arash Ferdowsi as a Y Combinator...
, Disqus
Disqus
Disqus is an online discussion and commenting service for websites and online communities that uses a networked platform. The company’s platform includes various features, such as social integration, social networking, user profiles, spam and moderation tools, analytics, email notifications, and...
, and Posterous
Posterous
Posterous is a simple blogging platform started in May 2008, funded by Y Combinator. It is based in San Francisco.Updating to Posterous is similar to other blogging platforms. Posting can be done by logging in to the website's rich text editor, but it is particularly designed for mobile blogging...
.