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VC firm to contribute to $150k YCombinator fund

Tuesday, 18 October 2011 | By Michelle Hammond
US-based venture capital firm Andreessen Horowitz has teamed up with start-up incubator Y Combinator, promising to contribute $50,000 of the $150,000 awarded to every Start Fund participant.

 

Start Fund, created in January this year, is a joint venture between online entrepreneur Yuri Milner and micro VC firm SV Angel, founded by angel investors Ron Conway and David Lee.

 

Milner and Conway created the Start Fund to invest in every new Y Combinator start-up, with each one awarded $150,000.

 

Established in 2005, Y Combinator invests a small amount of money – the average amount is $18,000 – into a large number of start-ups twice a year.

 

The start-ups move to Silicon Valley for three months, during which time Y Combinator works extensively with them to hone their offering and refine their pitch.

 

Each cycle culminates in a demo day where the start-ups present to a large audience of investors, with the aim of raising new financing.

 

However, Y Combinator’s involvement doesn’t end there. The Y Combinator network continues to help the founders of each start-up throughout the life of the company.

 

Andreessen-Horowitz, which is already an investor in some larger Y Combinator alumni such as Airbnb, has jumped on board by promising to contribute $50,000 of Start Fund’s $150,000 sum.

 

The firm will participate in the next Y Combinator start-up event at the end of this month.

 

“We’ve been working with Paul [Graham, founder of Y Combinator] for awhile and we’ve just been really impressed,” Andreessen Horowitz told VentureBeat.

 

“So when we had a chance to join the program, we said ‘absolutely’.”

 

Andreessen-Horowitz co-founder Marc Andreessen says Y Combinator produces start-ups of the highest calibre, hence the interest in getting on board.

 

“What you have with YC is a special situation. It is a very high quality set. Paul just impresses the hell out of us in terms of quality and the results he has had,” he says.

 

“He is running such a good selection process that an investment in this group is a good idea.”

 

One of the most successful Australian companies backed by Y Combinator is Omnisio, founded by Ryan Junee and acquired by Google in 2008.

 

After completing a three-month training program at Y Combinator, Junee and his partners attracted the interest of Google at a demo day.

 

Earlier this year, Y Combinator held a demo day for 63 start-ups – it’s biggest batch to date – with more than 30 of the companies pitching to investors.