General Business: YCombinator

Has everyone heard about YCombinator? I had heard of it a while back, but did you know Reddit was started from it? I didn't... interesting.

So the basic premise is this: you, and a co-founder or two, submit an idea to YCombinator. They judge the best ones, and invest in your company. They incorporate the company for you, etc. They give $5,000 + 5,000X where X is the number of cofounders. So 2 cofounders = 5000 + 10000 = 15,000. You spend a summer in Boston/Cambridge working on your company. Your internet startup. You spend every Wednesday night at dinner, talking with the other companies about their ideas.

In return, you give YCombinator 1-10% -- not bad for initial investors. So you get aquired for $200,000, YCombinator gets $20k at the most. You split the $180k over 3 people = $60k. Not bad.

So I sat here wondering... is this done on the regular, non-internet business level? I know there are business plan competitions... is that the equivalent? As far as I know, you don't move to the area to start your business. And the winnings are usually more, because it takes more money to start up a brick and mortar business versus an internet business.

Or can it be done? Could you start a competition similar to this, get a bunch of smart people together, and build actual companies?

FYI, Y Combinator didn't fund Justin.tv. They funded Kiko.com, which are the same guys, who sold Kiko.com on eBay and then founded Justin.tv.

Regardless, Y Combinator is outstanding for tons of reasons. Actually, Paul Graham (paulgraham.com) just wrote an essay on why you should start a startup. There's some obvious motivation behind what he's writing (he wants you to apply for Y Combinator), but the points are still good.