General Catalyst Joins SV Angel, Andreessen And Yuri Milner To Invest In The Y Combinator Start Fund

The Start Fund, the consortium of top investors who are backing every Y Combinator company, has a new partner: General Catalyst. The storied 12-year-old venture firm has already been busy expanding into Silicon Valley from its Boston home in recent years — and it has already gotten into around ten YC companies, including top ones like rental marketplace AirBnB and payments company Stripe.

So the fund is a natural extension of the firm’s effort. Started early last year by DST’s Yuri Milner and SV Angel (and later adding Andreessen Horowitz), it has been providing $150,000 convertible notes to every single company that gets accepted into Y Combinator, on top of the $20k that the seed-stage venture firm already puts in. This way, of course, these investors can get equity in any of the many YC startups that turn into big businesses, instead of having to battle it out in later rounds with the countless others who want in.

Y Combinator has been finding new uses for the capital. It has vastly expanded its class size in recent years, from a dozen or so when it first started to around 80 for the next one — with application rates increasing far faster than that. All the new companies in turn create more demand for seed-stage funding.

“Everyone wants to start with Paul and Jessica [Graham],” General Catalyst Partner Hemant Taneja says about YC’s cofounders during a call this morning. “It’s a great way to be there from inception.”

He adds that there’s a “great synergy” between the young technical founders who want to join YC and the young technical founders that General Catalyst likes to invest in.

YC and its portfolio companies feel the same way. “Hemant has been great,” says repeat YC alum Patrick Collison, now of quietly growing payment service Stripe. “He’s been there when we need him, helping to land us a deal recently for example — and trusting us to run things the rest of the time.”

AirBnb cofounder Brian Chesky adds, “General Catalyst brings tremendous strategic insights to the table and has been a terrific partner for us. The Start Fund has already made a huge impact on the start-up community and that impact will only intensify now that General Catalyst is joining their efforts.”