But underscoring investor appetite for hot Web start-ups, both are reaching out beyond their tight social circles to forge professional and social connections with a new group in town: the growing fraternity of start-ups backed by Y Combinator, a 2-year-old company with offices in Cambridge, Mass., and Mountain View.
The brainchild of entrepreneur Paul Graham - who in 1998 sold his company Viaweb to Yahoo for about $50 million and whose subsequent books and essays have won him a following of programmers - Y Combinator provides seed financing, guidance and killer contacts to entrepreneurs.
That's not so unusual for a fund until you consider that Y Combinator, named after a mathematical construct, doesn't just back promising young companies; it helps create them.
Here's how it works: twice a year, Y Combinator invites 'hackers,' or programmers, to fill out an online application, outlining who they are and a business idea. One winning batch of teams is funded in winter and the other in summer. With Y Combinator's help, each becomes a real company - one that is expected to create its product within three months. The amount of money Y Combinator gives each group - $5,000, plus an additional $5,000 per founder - is a pittance for what it asks in return, which "
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