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In March 2005, Paul Graham and Jessica had been discussing ways to improve the venture capital (VC) industry. They decided to start their own investment firm, which would later be called Y Combinator. The idea was born during a walk home from dinner in Harvard Square, where they decided to put $100k into the new fund. With Robert Morris and Trevor Blackwell joining, the initial investment was $200k. Initially, the plan was to provide seed funding with standardized terms, modeled after their own experience starting Viaweb. The concept of funding startups synchronously, rather than asynchronously, emerged from a summer program for undergrads in Boston. The first batch of founders surprised everyone by performing well, and the Y Combinator effect became a term describing the moment when people realized that YC was not just another startup accelerator.
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