Y Combinator co-founder Jessica Livingston on the beginnings of YC.

Origin and Context

• The entity originated in 2005 in Boston, a market distinct from and less developed than Silicon Valley at the time.
• The founders identified a lack of early-stage capital options, noting that traditional VCs required fully tested ideas and comprehensive business plans for multi-million dollar investments.
• The angel investment landscape in 2005 was significantly undersupplied compared to current levels, with no established small seed funds existing.

Strategic Decision and Model

• A decision was made to establish a very early-stage vehicle capable of writing small checks specifically to enable founders to quit their jobs.
• The primary objective was to provide founders with the liquidity required to pay rent and validate the viability of their ideas before seeking larger funding.