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.
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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.