Y-Combinator: the business boot camp for budding startups

Funding 80 start-ups at once
Funding 80 start-ups at once

    JUST WATCHED

    Funding 80 start-ups at once

MUST WATCH

Funding 80 start-ups at once 02:53

Story highlights

  • Start-up accelerator Y-Combinator provides seed money to new startups
  • It has been behind some of the biggest names in tech startups: Reddit, Dropbox and AirBnB
  • Established in 2005, the accelerator takes a 7% stake in the companies it backs
  • The company gives start-ups $120,000 and then helps them incorporate as a business
Creating the next Uber or Facebook may be the dream of many tech entrepreneurs, but it's only a small band that ever get to make it happen.
For Jessica Livingston, giving a fighting chance to that next big idea has become a business in its own right. As the co-founder of startup accelerator Y-Combinator, she knows a thing or two about what makes a successful tech company.
Her out-of-the-box idea was to provide small amounts of funding to lots of startups at once.
"A lot of times when start-ups get started, there's this kernel of an idea. It's not very exciting, all your friends and family are making fun of it," she said.
Established in 2005, Y-Combinator focuses on providing a small amount of funding, food, work space and expertise to up-and-coming entrepreneurs. In return, Y-Combinator obtains a 7% stake in each company once it is launched.
Groceries delivered straight to your car
Groceries delivered straight to your car

    JUST WATCHED

    Groceries delivered straight to your car

MUST WATCH

Groceries delivered straight to your car 03:00
Turning mobile advertising on its head
Turning mobile advertising on its head

    JUST WATCHED

    Turning mobile advertising on its head

MUST WATCH

Turning mobile advertising on its head 02:54
"Y-Combinator provides funding for startups at the very earliest stages," Livingston said. "We have an application process twice a year and we fund startups in batches. So we'll fund 80 startups at once over a three-month period."
$120,000 in funds
The company gives startups $120,000 and then helps them incorporate as a business.
"We then help them with their idea, help them launch and help them get press and then at the end of the three months we'll host a demo day and that is when the startups present to about 500 of the country's top investors to get follow-up funding," says Livingston.
Since its inception, Livingston has funded more than 700 startups and 12 non-profits. Some of them are now among the best known online companies in the world including Dropbox, AirBnB and Reddit.
"When you first get started on an idea, you don't want millions of dollars in funding," explained Livingston. "You wouldn't know what to do with it. You just want a little bit of money to see if your idea works and then take it from there."
She now has a keen eye for the "next big thing" and recognizes the role they will play in shaping the future of business.
Cohesive team
Key to the success of a startup, she said, is a cohesive founding team.
"Have the founders known each other for years? Did they go to school together, did they work together for five years? One of the biggest reasons startups fail early on is because the co-founders don't get along.
"I love startups because anyone can start one if they have a computer and an internet connection.
"You can be any age, you can do it from home. And it's all about seeing if an idea can work and to me that's just so exciting. and that's what gets me up every morning."
"It doesn't matter where you went to college. It doesn't matter who you know. We are just looking for a great idea."