Exploding Term Sheets Prompt Y Combinator To Sync Acceptance Dates With Competitors

This evening Y Combinator opened up applications for its Summer 2010 round, marking what will be the fifth anniversary of the program, which has funded 171 startups to date. This round is bringing an important change: the program calendar has been moved up by a month, which means that startups will find out if they’ve been accepted at nearly the same time that they’ll hear back from competing programs like TechStars and DreamIt Ventures.

The move stems from the growing competition between Y Combinator, which pioneered the startup mentorship model, and similar programs that have sprung up in its wake. Last March, Y Combinator issued an advisory to prospective applicants warning them of exploding term sheet offers from some of these competitors. These exploding term sheets are nullified within a day or two, which forces startups to quickly decide if they’d like to accept the offer. Because Y Combinator’s acceptance dates have historically been later than those of some competitors, this led to some startups joining programs that may not have been their first choice.

It’s worth pointing out that Y Combinator itself encourages startups to make up their minds quickly once they’ve received a funding offer. But YC founder Paul Graham says that the program will give startups more time if they have a reason for needing it, and that they’ve never used exploding termsheets.

Companies that have been accepted to Y Combinator will be notified the weekend of March 26-29. TechStars will be extending their offers on March 28. And DreamIt Ventures will make offers between March 25-31.

This session’s application includes one other notable change: startups are being encouraged to submit their applications as early as possible. Before now, half of all applications have been submitted in the last two days before the deadline as founders work to polish their applications. This time, the YC team will be reviewing applications earlier and interacting with founders before the deadline, so it’s in your best interest to apply as early as possible. Applications are due by March 3.