Yowza. Bubble? Or smart disruption of the startup funding ecosystem?
Yuri Milner, a partner at DST, the fund that invested in Facebook, Zynga and Groupon, and über-angel Ron Conway, are setting up a fund called Start Fund that will invest $150,000 in every single startup that comes out of top Silicon Valley incubator Y Combinator. (TechCrunch)
The investment will be convertible debt with no cap and discount, the most entrepreneur-friendly terms. Convertible debt, which is converted into equity in later funding rounds, is still controversial with angels.
The startups can choose to take the investment or not as they leave Y Combinator. (Update: Paul Graham emails us to tell us the startups are getting the money now, which is an even bigger deal.) This is a huge boost to Y Combinator, which is mimicked by other incubators like TechStars and SeedCamp, but who don’t have two of the world’s most renowned tech investors lining up to write fat checks to their startups with no condition.
And it’s obviously great for the startups themselves.
More about Y Combinator:
- Boom! Y Combinator Bags Three Exits In Two Weeks
- Here’s The Downside of Y Combinator