Y-Combinator Gets More Seed Money to Fund Startups

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Y-Combinator Gets More Seed Money to Fund Startups

Early-stage venture firm Y-Combinator is getting a boost of money from Sequoia Capital and a few angel investors. In these rather tough economic times, stories like this are quite welcome.

Y-Combinator estimates that with the $2 million raised, it will be able to increase the number of startups it seeds from 40 to 60 per year. Typically, Y-Comb puts in $5,000 plus an added $5,000 for each founder in exchange for between 2% and 10% in equity, with the median being 6%. This is how Reddit got its start, along with Disqus and Dropbox.

This is the first time Y-Combinator has raised money beyond what its four founders have put in.

If you want to apply for some of the cash, it’s good to work fast: they did push back the application deadline for this Summer’s round, but its right around the corner on March 25. If you’re accepted, get ready to move out to the Bay Area between June and August.

The great thing about Y-Combinator is that they aren’t just going to throw money at you and hope for the best. Every Tuesday, accepted startups have a dinner with the founders and an expert is asked to speak to the startups on a subject helpful to them.

After ten weeks, the startups are asked to present to a group of other investors. Y-Combinator doesn’t care if you take any money from them, as they already have a contract for a percentage of your equity.

Good to see some additional money out there for startups.

This entry was posted on Monday, March 16th, 2009 at 8:13 pmand is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.