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(Note: For the purposes of examining micro seed funding, Y Combinator's program will be used for the analysis because they pioneered the funding strategy and have the most developed program) Advantage: Easy Starting CapitalOne of the biggest advantages of Y Combinator funding is that it is a painless source of money. The 28 question application functions similarly to a traditional business plan, but is shorter and to the point. Soon after submission of the application, groups will find out if they were selected for an interview. The traveling expenses to either Boston, MA or Mountain View, CA are covered by YC. The interview takes about 15 minutes, with the majority of the time spent demoing the product or prototype the team has already started building. The interviews are carried out over a weekend, with 15 to 20 groups being interviewed each day. Decisions are made fast. Teams receive a call from Paul Graham, usually around dinner time of the day they interviewed, telling them whether or not they were accepted, and if so, the amount of money YC would be providing, the equity stake, and company valuation. Groups have to decide within just a few minutes if they want to accept the offer. If they accept, the founders are cut a check for their initial expenses the next day. |