Existing investors include the company’s CEO Anne Wojcicki, Google co-founder (and Wojcicki’s husband) Sergey Brin, New Enterprise Associates, Google Ventures and MPM Capital.

23andMe’s Personal Genome Service gives consumers the opportunity to understand their ancestry and genetic makeup, and it gives the company the chance to create a database of genetic information. By increasing the number of customers to one million, the company would have a larger database that would “enable groundbreaking research by creating an exponentially larger collective of actively engaged, genotyped individuals,” the company wrote in a press release.

The company also noted that the funding will allow it to “expand the necessary infrastructure to support growth in its research and operational capabilities, including product development, genetic research, software development, recruitment and marketing.”

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The changes scale back how much money startup founders will receive with the YC program — $80,000, down from $150,000 — but YC said it would organize network connections with notable local investors, which is arguably what YC is all about — building connections and networking while getting critical feedback as your company gets off the ground. Sure, it’s less cash, but it seems unlikely the changes will halt the flow of applications that come to the incubator each year from startups desperate to join. And the group hopes it will decrease founder disputes without hurting any of the successful startups.

In a post, Y Combinator explained that the decision shouldn’t hurt successful startups — who can still go out and fundraise after Y Combinator — and will cut down on founder disagreements for the companies who go bust, since there will be less to fight over. The decrease in initial funding could prove tough for some hardware companies, who tend to need more cash upfront, or international founders looking to secure visas and relocate, but otherwise should be an improvement, said YC partner Harj Taggar.

“It just made the disputes more heated becasuse there’s more at stake,” he said.

Initially, all companies selected as part of a Y Combinator class were offered a convertible note for $150,000 from investors Yuri Milner and Ron Conway. While Y Combinator wasn’t directly making that investment, it explained in a blog post that it ended up taking part in the complicated process. So, YC decided to create its own investment to simply the process:

“Although we didn’t organize this program, over the years we ended up de facto managing it, and it was awkward to manage something we hadn’t started. So we decided to take control of the situation and replace it with something of our own design.”

Now, YC startups will still receive a convertible note, but only for $80,000, and it will come from $20,000 each from Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital. Conway is notably absent from the list.

While upcoming classes of YC startups will likely be disappointed in the funding changes (who wouldn’t prefer twice as much money when starting a company?), the incubator has never been about making the most money possible in a few months. It’s about building connections with Silicon Valley investors, access to later funding rounds, and an alumni connection that can help with everything from finding office space to hiring programmers.

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Flotype, the Berkeley, Calif. startup that says it can make all manner of disparate devices and servers talk to each other in real time, has renamed itself Bridge and is now making that technology broadly available.

Bridge is a messaging server that will, in the words of company CEO Darshan Shankar, furnish “massive scale, enterprise-grade bidirectional communication between any server and any device.” That is a big promise.

In a conversation a few months ago, Shankar told me the technology, once known as Now.js,  will let any device talk to any server in a language- and hardware-agnostic way. He said the technology has been in pilot with several large companies but he did not name them.

According to the company’s re-branded “Getbridge” web site:

Bridge was designed for both client-server and server-server interactivity, with bidirectional communication to any client front-end applications (browser, mobile, desktop) and any server applications using WebSocket and TCP connections.

In January, the company, co-founded by Shankar, got $1.4 million in seed funding from Andreessen Horowitz, Ignition Partners, Yuri Milner and Salesforce.com to build out its vision.

Big webscale companies like Facebook and LinkedIn have built such systems specifically for their purposes that enable complex components to work together and appear as one. When you look at Facebook you’re really seeing a lot of things — chat, news feeds, photos etc. — all integrated and able to display to multiple devices. Bridge, Shankar said, will give other companies — those that don’t have 5,000 engineers on staff —  similar capabilities.

Photo courtesy of Flickr user F H Mira

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It’s fair to say that the site, which provides game-like online courses to teach people how to code, has had a blockbuster year so far. It’s spent 2012 seeing enormous growth, adding new marketplace features, and gaining a legion of fans, including New York mayor Michael Bloomberg.

But even though the site has seen a breathless rise to prominence, the money isn’t just being used to keep the servers spinning while demand grows: it’s got ambitions too.

Ahead of an on-stage interview with me at LeWeb London on Tuesday, co-founder Zach Sims told me that the new funds “give us the ability to go international” — something useful given that 50 percent of the company’s user base already comes from outside the U.S.

And in a post on the company’s blog, he explains his belief that the latest investors are well-placed to help it achieve that expansion.

“A few weeks after we launched Code Year, we met Neil Rimer and Saul Klein of Index Ventures.  Saul told us, about the world he wanted for his kids – one where code was a foreign language as important as Chinese and English for people to learn.  Mary Meeker of Kleiner Perkins visited our office around the same time and painted a picture of a few industries that needed to be shaken up – education chief among them.”

“It became clear that we needed partners who both understood the importance of a global company… and the process of scaling a company far beyond the nine people we have grown to now.”

It’s actually the first investment from Index’s new €350 million early stage fund, but still, it’s only eight months since the business announced its last round of funding, a $2.5 million round from investors including Union Square Ventures, Ron Conway’s SV Angel and Michael Arrington’s Crunchfund.

This time round Union Square is following up, with Index’s Saul Klein leading the round and KPCB’s Mary Meeker joining in too.

So what do they see in it?

Index’s Klein told me that he was excited by Codecademy for many reasons, but not least because “it’s not a content-needy educational publisher” but “a marketplace for students and teachers.”

He also pointed out that with a global depression, it made sense to back a company that gives people the chance to learn new skills and potentially find jobs that they wouldn’t have otherwise been able to access.

That seems a proposition that is not just popular with VCs but also a magnet for billionaire tycoons: not only did Bloomberg express his support for the site, but investors include Russian Yuri Milner (who adds to his previous investment) and Virgin founder Richard Branson.

Here’s my chat with Zach Simms at LeWeb:

Photograph of Codecademy founders Zach Sims and Ryan Bubinski used under Creative Commons license courtesy of Hack NY

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The latest gossip, which the incubator-cum-accelerator will unsurprisingly not discuss, is that billionaire Leonard Blavatnik has put $200m into Rocket via his Access Industries vehicle.

While it would hardly be the first investment by Access in a Samwer vehicle — Blavatnik has previously shored up GlossyBox (a BirchBox clone), Pinspire (do I even need to name the original site?) and WestWing — but it would be the chunkiest yet.

And, if the unnamed sources being quoted in the Venture Village report are on the money, it may take Rocket up to at least $590m in their quest to build a billion dollar round. Sweden’s Kinnevik has put $390m into Rocket and its portfolio companies and got 25 percent of Rocket’s shares in the deal, according to Q1 results revealed in April.

Of course, not everyone’s happy to have the Samwer association. Their abrasive style was rumored to be behind Russian investor Yuri Milner’s decision to walk away from the current round.

With a company as secretive as Rocket is, it’s probably not possible to track every investment. And some deals get announced without a specific figure. But here’s what we know (or are led to believe) has come in this year alone:

• Access Industries – $200m in May
• Access Industries – 7% stake, undisclosed value, in GlossyBox in March
• Kennevik – $390m in Q1
• DST (Yuri Milner) – 4% stake, undisclosed value, in Zalando in February
• eVenture Capital Partners and New Enterprise Associates – undisclosed stake in Dropgifts

We’ll update this list as we learn more…

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To some, the strategy looked crazy. In a deal overseen by Yuri Milner — an elusive former physics grad student from Moscow — the money was not just substantial, but it came with almost no strings attached. Not only did Milner have little say in how the company was run and no voice on the board, but he also agreed in a side deal to buy back another $100 million in stock from existing shareholders.

It was the sort of approach that left many in the Bay Area wondering if he understood how venture capital worked at all.

But when Mark Zuckerberg’s social network goes public later this month, Milner’s strategy will score its greatest triumph, as DST and its partner Mail.ru Group plan to sell around a third of their stake for $1.5 billion, netting a huge profit.

Who’s crazy now?

Vindication

According to Facebook’s IPO prospectus, DST — which operates through a complicated series of companies, is lining up the sale of more than 26 million shares worth nearly a billion dollars at the high end. Meanwhile Mail.ru, another holding company related to DST, will sell in the region of 11 million shares for up to $400 million.

The money will not only boost Milner’s personal wealth, but also plump the bank account of his main backer, the Uzbek oligarch and industrial magnate Alisher Usmanov — who Forbes says is already worth some $18 billion.

But perhaps its greatest value will be a vindication of DST’s model, which has gone from being seen as the work of green investors to perhaps being the single most important factor behind the recent surge of activity in Silicon Valley and across the technology industry more generally.

After all, Milner’s approach is a little different from the risky, spray-and-pray approach taken by many VCs. Instead, he has used money to make money in the most serious fashion.

With the backing of Usmanov (their relationship was detailed somewhat in a great feature in The Deal last year) Milner has perfected a way of making huge sums when everybody else feared creating a bubble.

Essentially the tactic seems to boil down to a series of straightforward steps: first find a category leader like Facebook, Zynga or Groupon; then use heavy investment to make sure that they outpace their competition and stretch their lead even further; then continue pushing them, with more money if necessary, towards an IPO.

But while the money clearly has intentions tied to it, it also appears to have no pressure — something that made DST a darling of entrepreneurs already fed up with juggling complex relationships with investors.

This approach was detailed by Michael Wolff in Wired a few months ago, and it’s as true now as it was then:

Milner offers something radically or foolishly different: an investment with no such preferences and no board seats. In effect, his money is like IPO money—no advantages for regular shareholders—without the burden of an IPO (the time suck of a road show, the administrative costs of being public, the short-term earnings pressure of the market).

The proposal represents, too, a philosophically new and audacious view: Once a company reaches a certain size—a billion-dollar valuation by Milner’s reckoning—its investment profile changes. It holds enough market share and has established enough brand identity that it represents significantly less risk than VCs have traditionally considered startups to have.

His smartest trick was boosting the industry at a time when most investors were being incredibly meek — effectively single-handedly inflating a flaccid market.

Today, look around and you see huge rounds being pumped into companies like Dropbox or InMobi — or you see massive deals for companies like Instagram.

Without DST’s intervention, I’m not sure we’d be here.

Time for investors to send a letter of thanks to Moscow, perhaps?

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Last week the news came through that Yuri Milner, the man many credit with turning the company around, was standing down as chairman. The reason, ostensibly, is so that he can focus on the investments he’s making through Digital Sky Technologies: after all, he is trying to raise a $1 billion fund right now.

Since then it has also emerged that fellow co-founder Mikhail Vinchel had sold most of his shares in the company, netting $124 million.

So what does this all mean?

In some ways, perhaps this is just time taking its course. Mail.ru went public nearly 18 months ago, a move that buoyed the company’s coffers — not least because it gave ordinary investors the chance to get a second-hand stake in Facebook, Zynga and others. No surprise, then, that those with significant stakes in the business decide to head off after while.

But the departure of such key figures certainly sends out an interesting message. Whenever founders pull out there are always questions about the future. And while Mail.ru is posting pretty good results, it is also seeing its search share drop and its share price has been a little erratic.

That’s left some industry analysts unimpressed.

Gazeta.ru quotes several industry analysts who feel that the company may have hit its peak.

“From our point of view, the growth potential is limited and we do not see further growth of the business,” says Konstantin Chernyshev of Uralsib. “Most likely they are considering investing in other internet projects.”

If that’s the case, then we’re just watching senior figures cash out at the top, leaving behind whatever mess comes next for somebody else to deal with.

Or perhaps that’s too harsh. Certainly not everyone agrees. Forbes takes a dispassionate view of things: In an editorial on Milner’s departure, it essentially makes the argument did his job, and he’s earned the right to go off and do other things.

Milner has fulfilled his promise… very few people were surprised when Milner sold his shares in Mail.ru, leaving little more than 3 percent behind. He worked for investors, now it’s time to work for himself.

Last year we pondered what it meant when senior figures cash out of tech companies, and ended up looking at a very mixed picture. Sometimes it doesn’t stop the business from flying; sometimes it’s a signal that something is not right. The only way to really know which way Mail.ru will go may be to wait and see.

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So perhaps the news that DST is on the verge of launching a new $1 billion fund, reported by Bloomberg on Wednesday, was simply a matter of time.

The detail of how it is happening is fairly interesting:

DST has committed Facebook stock valued at $50 million to the fund, meaning limited partners get a chance to own the shares through their investment, according to an investor presentation obtained by Bloomberg News. Early investors were offered the Facebook holding at a 12 percent discount to an internal valuation of about $74 billion, as well as a 25 percent reduction in the fund’s management fee.

But the real question on everybody’s lips is where the money will go.

The company seems to have put some serious constraints on the destination for cash it manages. DST only plans to make minority investments in late-stage startups that are valued at $500 million or more: effectively using the money to priming the IPO pump. It’s a tactic Milner has used to great affect already, putting money into LinkedIn and Groupon shortly before they went public.

Given DST’s previous investments — Zynga, Twitter and Airbnb are also in there — it seems to like consumer-facing services that are well-known and have strong levels of media attention, which is always useful for driving up valuations. And with the other limitations it appears to have put in place, the number of companies that could be looking at taking this investment are relatively small.

Forbes Russia suggests five companies in the running: Dropbox, Square, Pinterest, Quora and Storm8.

Those are all fair bets. Square’s Jack Dorsey has already teamed up with Milner at Twitter, the business has good relations with startups that come out of Y Combinator, and it often invests alongside Andreessen Horowitz (which has money in Pinterest, for example).

Who else could be on the list?

I doubt there will be many surprises, but businesses like Foursquare, Tumblr and Instagram also certainly have the current valuations that would satisfy DST’s requirements. Businesses like Etsy and Box.net might appeal too. Meanwhile, it’s not beyond DST to invest in non-American companies (it has Spotify on its books for example), but the pool of candidates outside the U.S. is even more limited, especially if Milner wants to take the companies onto the American markets to maximize his returns — possibly leaving Angry Birds maker Rovio as one of the only options that fits.

Any others?

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I sat down with Codecademy co-founder and CEO Zach Sims to hear about how the company got to this point so quickly, and what’s on deck for the months ahead. Here are a few key takeaways:

Necessity breeds invention

The idea behind Codecademy emerged out of the founding duo’s frustrations with the status quo of learning how to program. Co-founder Ryan Bubinski was already an experienced programmer who spent his weekends and free time during college teaching other students how to build web applications; but Sims was not nearly as familiar with coding. When the two entered Y Combinator’s summer 2011 class together in the hopes of launching a web startup, Sims tried to learn how to code on his own so that he could be of more help on the technical side of whatever business they founded.

“I was watching videos and tutorials and reading books,” Sims said. “But I found I learn best by building things and breaking things, not by just reading something. I wanted something interactive where I could learn in bite-sized pieces, and actually practice what I learned along the way.” So Sims and Bubinski decided to use their time at Y Combinator to build exactly that — and Codecademy was born. The company is now backed with $2.5 million in venture capital from a handful of elite investors including Union Square Ventures, O’Reilly Ventures, SV Angel and Yuri Milner.

Timing is everything

Codecademy’s message — that knowing how to write computer code is becoming just as important as knowing how to read or write — could not have come at a better time. While many sectors of the economy are suffering from layoffs and underemployment, the tech industry is having a full-on hiring crunch. Nearly every tech industry executive I talk to is currently looking to hire as many good engineers as he or she can find. The only problem is that not enough people right now have the programming skills necessary for those jobs.

Screenshot of an introductory Codecademy lesson (click to enlarge)

“Programming is the new literacy,” Sims said. “We’re all walking around with these phones in our pockets, using all these apps, but no one understands how any of it works. There are just not enough engineers, and this is the job of the future.” That Codecademy launched just when this started to become apparent on a larger scale has been key to its early success.

Listening to users — online and off

When Codecademy’s users started getting together offline by scheduling real-life meetups, the company decided to follow them. Last week saw the launch of official Codecademy meetups, and there are now official meetup groups in 171 regional areas worldwide to let people get together in person to discuss their progress learning how to code. Also last week Codecademy launched a Q&A feature within its web product to let people talk to each other via online forums while doing the Codecademy lessons.

Getting bigger, but staying scrappy

For now, Codecademy does not make any revenue, but in the future it could start charging for more advanced lessons and premium services, Sims said. Any revenue generation plans are a bit farther out on the horizon, as right now the company’s focus is on growing its user base and adding new lessons to the core free service. One thing is certain, though: Codecademy has no plans to become an accredited learning institution that charges for a degree.

Sims, who studied Political Science at Columbia University but dropped out several credits shy of graduation, said that Codecademy is founded on the belief that skills are the most important factor in getting good work — not educational credentials. “If you look at a lot of Silicon valley companies, they don’t hire based on a degree. A lot of the best programmers in the industry never even went to college at all,” he said. “Your skills should speak for themselves.” That sounds like a worthwhile lesson in itself.

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Evernote CEO Phil Libin

The tech industry as a whole has had a pretty strong year. Mobile devices are everywhere, the apps that run on them are flourishing, and the experience of using the web is becoming more personalized to individual tastes than ever before. And as it turns out, all of these trends have been especially beneficial to Evernote, the company that makes note-taking and personal archiving software.

In terms of user growth alone, 2011 has been a red-letter year for Evernote. The company started the year with 6 million users, and ended it with 20 million users, CEO Phil Libin told me in an interview last week. That’s impressive in itself, but Libin says such growth has only whetted the company’s appetite for more:

“On one hand, I’m really proud of that, and I’m really proud of our team. But on the other hand, 20 million users is a tiny fraction of what our overall goal is. There are still about 7 billion people out there on the planet who aren’t using Evernote. We want to improve everyone’s life, and we won’t be satisfied until we’ve gotten there.”

It seems that Evernote’s success is tied to the fact that its management is concerned with longevity above all else, rather than a near-term sale or IPO. Libin often says that he is building Evernote to be a 100-year company, and according to him this mentality affects everything:

“It really impacts how we approach our pricing, our business model, who we want on our board, who we hire as employees. For a lot of us at Evernote, this is our second or third or fourth company we’ve built in our careers. Those first few companies, maybe, we were in the mindset of doing something for a few years to flip it — sell the business and move on. That mentality is not that interesting to us anymore.”

Evernote is not the only web company that is thinking longer term. According to Libin, this is largely attributable to a recent shift in the venture capital industry (Evernote itself has taken on nearly $100 million in funding, its most recent outside investment being a $50 million Series D round led by Sequoia Capital this past summer). The impact of recent changes in how VC funding rounds are structured that allow early investors and founders to cash out parts of their company holdings before a larger “exit” cannot be understated, Libin says:

“The conventional wisdom used to be that there was no money for early investors or founders until either you sold or went public. That meant that people at startups were strongly discouraged from long-term planning and long-term thinking, because no one had any liquidity until the very end.

What Yuri Milner and Sequoia and other people have done recently is conduct investment rounds that break that model. Now, people can buy and sell their shares: Early investors can get out, founders can make a little bit of money but still stay with the company. I think this separation of liquidity and exit is maybe the most important thing to happen in business in the past decade. It’s what’s made the growth of companies like Facebook and Evernote and Twitter possible.”

However, despite the fact that it plans to be around for more than a century, Evernote still wants to retain the energy of its early startup days. That’s going to be a big focus in 2012, since the company has grown significantly in the past 12 months: Evernote began 2011 with 40 employees, and is closing the year with a staff of 130. Libin says he will direct a lot of his personal attention to fighting off the negative side effects of such growth:

“I have to go on a really active battle against encroaching corporate bureaucracy, and the stupidity that inevitably seeps into companies when they get past 100 people. I need to be on a mission to make sure that we don’t get to the point where we have stupid looking corporate clip art hanging in our offices, that we don’t have unnecessary procedures, that we don’t adopt passive-aggressive policies.

Naturally I’m very hands-off as a CEO — I’m not normally one of those people that obsesses about corporate culture. But now that we’ve hit that 100-person threshold, I feel that I have to be much more conscious of it going into 2012.”

That seems like a worthy goal — albeit a challenging one. But then again, New Year’s resolutions are not meant to be easy.

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