Y Combinator

Y Combinator is an American seed-stage startup funding firm, started in 2005 by Paul Graham, Robert Morris, Trevor Blackwell, and Jessica Livingston. 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 ($17,000 for startups with 2 founders and $20,000 for those with 3 or more). This reflects Graham’s theory that between free software, dynamic languages, the web, and Moore’s Law, the cost of founding a startup has greatly decreased. The firm is named after a construct in the theory of functional programming.

Y Combinator was started after Graham gave a talk at his alma mater, Harvard (where he earned a PhD in Computer Science). He suggested founders seek seed funding from angel investors preferably those who had made money in technology. He soon after organized Y Combinator to offer seed funding to startups. As of June 2009, Y Combinator had funded over 118 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 2010 cycle, there were 38. Some of the better-known funded companies include Reddit and Dropbox.


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