Y Combinator is an American seed-stage startup funding firm, started in 2005 by Paul Graham, Robert Morris, Trevor Blackwell, and Jessica Livingston. Y Combinator provides seed money, advice, and connections at two 3-month programs per year. In exchange, they take an average of about 6% of the company's equity.
Compared to other startup funds, Y Combinator provides very little money ($17,000 for startups with 2 founders and $20,000 for those with 3 or more). This reflects Graham's theory that between free software, dynamic languages, the web, and Moore's Law, the cost of founding a startup has greatly decreased.
The firm is named after a construct in the theory of functional programming called the "Y combinator".