How Y Combinator Schools Tech Startups

Jessica Livingston

Partner and Cofounder
Y Combinator
Mountain view, California

JESSICA LIVINGSTON, 38, along with Trevor Blackwell (center), Paul Graham, and Robert Morris, cofounded Y Combinator, which trains early-stage tech startups for a “semester” to help them navigate companyhood. Alumni include leaders of social news site Reddit, acquired by Condé Nast in 2006.

Livingston: “Twice a year, we choose 15 to 20 groups to fund at once. They have to move to where we are [Cambridge, Massachusetts, in the summer; Silicon Valley in the winter] for three months, and we work with them in the earliest phases of their startup. We give them just enough money to quit their jobs and work on their ideas full time. Technical expertise is really important. We offer ours: Trevor, Paul, and Robert, for example, built the first Web app in 1995. Because the business side is foreign to our entrepreneurs, we ease the pain of all that stuff. I walk them through everything they need to do to incorporate, issue stock, appoint board members, and so forth. We’ve also developed a bunch of financing documents that our founders can use to save them legal fees, part of our goal to figure out how to launch and run startups really cheaply.

The three-month cycle is intensive, and it all escalates to Demo Day, when these mostly first-time entrepreneurs present to a room of about 200 of the top investors in the country. So far we’ve invested in about 120 startups; 8 have been acquired, and a large majority have gone on to get angel or VC funding.”