Keith Rabois* Is the New King of Y Combinator

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Updated.¬†Last week I didn’t have much time to write (I was subbing at the GigaOM edit desk), but I did have the chance to drop by Y Combinator’s summer Demo Day in steaming hot Mountain View, Calif. This batch of companies in the three-month-long YC program is further along than previous classes, and more enterprise- and commerce-oriented, and at least six of 36 companies are already profitable (one, Brushes, said it’s taking in $60,000 per month selling iOS painting apps, a new Demo Day revenue record). Many have already raised funding, and (as I’ll tally below), many of them from the same set of angel and early stage investors. Angels Keith Rabois and Paul Buchheit (see update below) have surged to an early lead with five investments in the class prior to Demo Day.

Multiple presenting startups showed off cool ways to visualize and interpret data, and only a couple were focused on YC’s cash crop to date, productivity apps. More than a third of the presentations were designated off the record (grrr…), in most cases because the presenting companies haven’t launched products yet. At least eight teams touted their credentials as MIT graduates.

The most interesting trend I noticed was the funding status of many presenting companies. Ten weeks into the program, many YC startups already have money in the bank. Of the startups that have already raised funding, many have had success hitting up the same core clique of angel investors. I conducted an informal survey of investors at the event to ask how many of the summer Y Combinator class they’d already funded. I would’ve guessed archangel Ron Conway with his SV Angel outfit would be leading the pack, but so far that’s not the case.

Keith Rabois, the new general manager of Square after his company Slide was sold to Google, is actually the fastest on the draw, with five investments in summer 2010 Y Combinator startups as of Demo Day. Five out of 36 companies is a stunning proportion. Rabois’ picks include private and ad hoc social networking site The Fridge. (See our recent video interview with Rabois embedded below.) Update: Rabois tells us that as of Monday (less than a week after Demo Day), he has invested in six startups from the class.

Another update: Paul Buchheit of Gmail and FriendFeed fame says he also had five investments as of Demo Day, and is now up to six as of Monday.

Naval Ravikant is close behind with four. (We also recently captured him on camera.)

Conway’s SV Angel has three also had four at the time of Demo Day, including Hipmunk, and partner David Lee said he’s also interested in one of the off-the-record startups. Update: Lee says that as of Monday, SV Angel’s count is up also to six.

Dave McClure of 500 Startups, who’s been on a deal-making rampage lately, has three, including Ginzametrics and Rapportive. (GigaOM video here.)

First Round Capital has two.

Mike Maples and Ann Miura-Ko of Floodgate, who recently raised $73.5 million to invest in young startups, said they have yet to fund any summer 2010 YC companies. Josh Felser of Freestyle Capital also has zero under his belt.

To be fair, I didn’t talk to every angel investor (and I only attended the first of three Demo Day sessions). Plus, there may well have been additional deals completed over the weekend. (Update: Per Lee’s, Rabois’ and Buchheit’s additional information today, that definitely was the case!)

Y Combinator head honcho Paul Graham was careful to announce that all participants in the summer class are currently raising money. That includes companies that have already announced completed rounds, like Rapportive,¬†whose CEO Rahul Vohra said he would still take more money on the right terms. Because Y Combinator hosts Demo Day as a sort of coming-out party to introduce its startups to angels and early-stage investors, that’s an important distinction, even if it’s only semantic. Graham doesn’t want the hundreds of attending investors to feel like they’re out of the game.

In related news, after Y Combinator announced a partnership with Facebook last week for social startups in its upcoming classes, the always-provocative angel investor Jason Calacanis took the opportunity to warn entrepreneurs to stay far away. “If you tell Facebook about your startup before you reach critical mass, you are an idiot,” he said. “It’s a trap.” Calacanis was apparently referring to recent Facebook acquisitions of small companies that were effectively “acq-hires” of their young founders, with limited returns to investors.

Meanwhile, on the issue of the conflicted relationship between angels and venture capitalists, after his portfolio company Etsy announced a fifth round of funding, consumer Internet VC Fred Wilson noted on his blog that the transaction gave angel backers in the company an opportunity to sell their shares for cash, with VCs taking over more of the now-large company’s equity. He said he hoped that model of “angel liquidity” would help smooth out the (increasingly longer) path of a startup through angel to VC to sale or IPO.

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