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Summary:

Y Combinator is capitalizing on its formidable momentum to raise an $8.25 million fund for its startup program. Meanwhile, it said today that 74 percent of the 27 companies from its latest class are either profitable or have received commitments for outside funding.

Y Combinator is capitalizing on its formidable momentum to raise an $8.25 million fund for its startup program. The investment was led by Sequoia Capital, and includes angels Ron Conway, Paul Buchheit, Aydin Senkut, XG Ventures (a group of former Googlers) and Geoff Ralston. It adds to the $2 million the program raised from many of the same investors about a year ago, and marks further consolidation in early-stage web startup investing by some of the most prominent and prolific participants.

Y Combinator founder Paul Graham

YC companies have been among the primary beneficiaries of the frothy state of angel investing in web startups these days. The Mountain View, Calif.-based program’s just-concluded winter cycle of companies, which launched to investors in March, has found it incredibly easy to raise money: 74 percent of the 27 companies are either profitable or have received commitments for outside funding, YC said today. And at least a handful of those rounds were for over $1 million, we’ve been told.

All this interest could have something to do with the strength of the startups participating in the program, and — given its track record and reputation after five years — the strength of the program itself. But as is typical, there’s also a fair bit of piling on involved.

Y Combinator has funded 207 companies including the group that will start in June, which it bumped up to 35 total startups. In a blog post, founder Paul Graham noted “The new fund is more than four times larger than the preceding one, partly because it’s meant to last for several years, and partly because we’re going to use it to increase the number of startups we fund.” Y Combinator also recently hired Harjeet Taggar as a venture partner and startup adviser. He was formerly founder of Auctomatic, a YC company that was sold to Live Current Media in early 2008.

Recent acquisitions of companies from the Y Combinator program include reMail and AppJet, both by Google. As to which of the companies YC thinks are the most promising, here’s the list it included in the post: “Airbnb, Bump, Cloudkick, Clustrix, DailyBooth, Disqus, Dropbox, Heroku, Heyzap, Justin.tv, Loopt, Posterous, RethinkDB, Reddit, Scribd, Songkick, Weebly, Wepay, Wufoo, and Xobni.”

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  1. MyLocator ™ Friday, May 21, 2010

    google with their 20 bill cash on hand and and 20 thousand employees pilaging a startup sandbox.

  2. Reilly Brennan Sunday, May 23, 2010

    What I find most interesting is that Graham and co really started hitting their stride from YC when they brought all the companies together at once (as opposed to investing one by one at different times). The bringing together had the unintended benefit of letting the teams learn from each other in addition to Graham and his team. I wish I would have known about something like YC when I was 19.

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