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Y Combinator

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Y Combinator
Company typeLimited liability company
IndustryVenture capital
FoundedMarch 2005
HeadquartersMountain View, California
Key people
Paul Graham, Trevor Blackwell, Paul Buchheit, Jessica Livingston, Robert Morris, Harj Taggar, Sam Altman
ProductsInvestments
Websitewww.ycombinator.com
Paul Graham talking about Prototype Day at Y Combinator Summer 2009

Y Combinator is an American seed accelerator, started in March 2005. Y Combinator provides seed money, advice, and connections at two three-month programs per year. In exchange, they take an average of about 6% of the company's equity.[1] As of 2013, Y Combinator has funded over 500 companies in over 30 different markets.[2] In 2012, Y Combinator was named the top startup incubator and accelerator by Forbes.[3]

Program

The program consists of weekly dinners where guests come to speak to the founders, as well as "office hours", where founders can meet individually with YCombinator partners for advice.[4]

YCombinator provides $120,000 in funding for all startups since Summer 2014 in exchange for 7% of the company.[5] Previously, YCombinator provided little money compared to other startup funds ($14,000 for startups with one founder, $17,000 for startups with two founders, and $20,000 for those with three or more prior to 2014[6]). Prior to the Winter 2013 class, Yuri Milner and SV Angel offered every Y Combinator company a $150,000 convertible note investment through the Start Fund.[7] Starting with the Winter 2013 the Start Fund was replaced by "YC VC", a similarly structured $80k from Andreesen Horowitz, Yuri Milner and others. 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.[8] Wired has called Y Combinator a "boot camp for startups" and "the most prestigious program for budding digital entrepreneurs".[9]

The firm is named after a construct in the theory of functional programming called the "Y Combinator".[10]

Paul Graham has said that a good growth rate (growth in revenue or number of active users) during Y Combinator is 5–7% a week, although in exceptional cases this number can be as high as 10%.[11]

The average valuation of Y Combinator-backed companies, according to co-founder Paul Graham, is $45.2 million.[12]

History

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.[13]

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.[14]

Starting in 2011, Yuri Milner and SV Angel offer every Y Combinator company a $150,000 convertible note investment.[7] The amount put in to each company was changed to $80,000 when Start Fund was renewed.[15]

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.[16]

In September 2013, Paul Graham announced Y Combinator would now fund nonprofit organizations after having tested the concept with Watsi.[17]

People

Y Combinator was founded in March 2005 by Paul Graham with his Viaweb co-founders Robert Morris and Trevor Blackwell, as well as Jessica Livingston. In early 2010, Harj Taggar, cofounder of Y Combinator-funded Auctomatic, joined as an advisor. In September 2010, Alexis Ohanian, co-founder of Y Combinator-backed Reddit, joined.[18] In November 2010, Gmail creator Paul Buchheit and Harj Taggar were named partners.[19] In January 2011, Y Combinator-backed Posterous co-founder Garry Tan joined as designer-in-residence.[20]

In the summer of 2014, Sam Altman became president of Y Combinator.[21]

Notable portfolio companies

As of May 2013, Y Combinator had funded over 500 startups.[22][23] The number of startups funded in each cycle has been gradually increasing. The first cycle, in summer 2005, had eight startups. In the summer 2012 cycle, there were more than 80. Y Combinator subsequently reduced their class size down to less than 50 with their winter 2013 batch,[24] but as of summer 2014 is back to more than 80.

Some of the better-known funded companies include Scribd, reddit, Airbnb, Dropbox, Disqus, Heroku, Keychain Logistics, One Month, and Octopart.[22]

Paul Graham has stated that 37 of over 500 start ups have a valuation of over $40 million.[25]

Paul Graham noted at the Global Mobile Internet Conference that Y Combinator startups have a combined value of more than $13.7 billion.[26]

See also

References

  1. ^ "Running a Hatchery for Replicant Hackers". New York Times. 2006-02-21. Retrieved 2008-08-27.
  2. ^ "Y Combinator Companies - Y Combinator Universe". Retrieved 23 February 2013.
  3. ^ "Top Startup Incubators And Accelerators: Y Combinator Tops With $7.8 Billion In Value". Forbes. 2012-04-30. Retrieved 2013-08-05.
  4. ^ Graham, Paul. "What happens at YC". Retrieved 8 May 2013.
  5. ^ "YC Ends YCVC In Favor Of Raising From LPs, Will Now Invest $120K For 7% Equity".
  6. ^ "Y Combinator Frequently Asked Questions".
  7. ^ a b "Start Fund and SV Angel Invest $9 million in new Y Combinator Startups". TechCrunch. 2011-08-01. Retrieved 2011-08-02.
  8. ^ "Planning for a Crush of Startups". BusinessWeek. Retrieved 2008-08-27.
  9. ^ Levy, Steven (2011-05-17). "Y Combinator Is Boot Camp for Startups". Wired. Retrieved 2011-06-24.
  10. ^ Y Combinator FAQ "Why did you choose the name "Y Combinator?" The Y combinator is one of the coolest ideas in computer science. It's also a metaphor for what we do. It's a program that runs programs; we're a company that helps start companies.
  11. ^ "How Y Combinator Thinks About Growth". GrowHack. Retrieved 2012-09-25.
  12. ^ "Top Startup Incubators And Accelerators: Y Combinator Tops With $7.8 Billion In Value". Forbes. 2012-04-30. Retrieved 2012-12-06.
  13. ^ "California Year-Round". Y Combinator. Retrieved 2009-01-29.
  14. ^ "Y Combinator Gets The Sequoia Capital Seal Of Approval". TechCrunch. 2009-05-16. Retrieved 2011-02-10.
  15. ^ Rao, Leena Rao. "Y Combinator's YC VC Will Replace The Start Fund; Includes Yuri Milner, Andreessen Horowitz But Offers Less Money".
  16. ^ Tsotsis, Alex (December 22, 2011). "Paul Graham: SOPA Supporting Companies No Longer Allowed At YC Demo Day". TechCrunch. Retrieved December 23, 2011.
  17. ^ http://thenextweb.com/insider/2013/09/06/following-watsi-y-combinator-to-now-fund-non-profit-startups-in-the-form-of-a-charitable-donation/
  18. ^ Wednesday, September 1st, 2010 (2010-09-01). "Reddit Cofounder Alexis Ohanian To Join Y Combinator". TechCrunch. Retrieved 2012-02-28.{{cite web}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  19. ^ Graham, Paul (2010-11-12). "Y Combinator announces two new partners, Paul Buchheit and Harj Taggar". Y Combinator Posterous. Retrieved 2012-02-28.
  20. ^ Melanson, Mike (2011-01-14). "Posterous Co-Founder Garry Tan Leaves for Y Combinator". Readwriteweb.com. Retrieved 2012-02-28.
  21. ^ "Sam Altman for President". YCombinator blog. February 21, 2014.
  22. ^ a b "Seed-DB Y Combinator".
  23. ^ "Paul Graham: 37 Y Combinator Companies Have Valuations Of Or Sold For At Least $40M".
  24. ^ "YC W13 Will Be Smaller".
  25. ^ Sunday, May 26th, 2013 (2013-05-26). "Paul Graham: 37 Y Combinator Companies Have Valuations Of Or Sold For At Least $40M". TechCrunch. Retrieved 2013-06-14.{{cite web}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  26. ^ http://techcrunch.com/2013/10/25/y-combinator-13-7b-valuation/
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