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Sam Altman, president of Y Combinator. Photo by Bloomberg.
Venture Capital

Venture Firms Fret as Y Combinator Soars

By
Eric P. Newcomer
 |  Sept. 8, 2014 7:58 AM PDT
Photo: Sam Altman, president of Y Combinator. Photo by Bloomberg.

For even the most distinguished of venture capital firms, it’s now obvious that Y Combinator and other startup “accelerators” pose an existential threat. And recent moves by Y Combinator and its new boss, Sam Altman, are bound to further aggravate tensions with VCs even if the red-hot accelerater chooses not to become a direct competitor in the venture funding business.

Since it was launched nine years ago, Y Combinator has chipped away at one of top-tier venture firms’ most valuable functions: using their august brands and network of elite connections to effectively anoint certain companies as likely winners. The YC brand has exploded as alumni such as Airbnb, Dropbox and Twitch soar, and there is today no better calling card for a Silicon Valley startup than to be “a YC company.”

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