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Dear startups: Don't treat money like toilet paper

Having lots of money isn't a reason to spend it, especially if you're a startup that has yet to prove itself as a viable, sustainable business.

There have been a lot of early-stage startups raising monster rounds in recent months. Ark ($4.2 million seed), Viddy ($30 million), and Gumroad ($7 million) are just a few prominent examples.

The funding party may be over though, at least according to Paul Graham, a prominent investor and founder of Y Combinator.

"Jessica and I had dinner recently with a prominent investor," Graham said in a letter to Y … Read more

Facebook's IPO will hurt startups, warns Y Combinator founder

One of the most prominent people in Silicon Valley's startup world is warning that Facebook's disastrous IPO performance will lead to hard times for startups.

Paul Graham, the co-founder of the first and most influential startup incubator anywhere, sent an e-mail to his portfolio companies warning them that Facebook has made it a lot harder to raise money. Graham wrote that "the startups that really get hosed are going to be the ones that have easy money built into the structure of their company: the ones that raise a lot on easy terms, and are then led … Read more

Y Combinator: Disneyland for investors

Y Combinator is one of the most influential organizations in Silicon Valley. But thanks to the incubator's most recent demo day, it has become a Disneyland for investors, where startups are the attractions that VCs and angels are willing to pay to ride.

On Wednesday, YC graduated 65 startups from its program, its largest class yet. The room was wowed by pitch after pitch from companies like Sonalight, 99dresses, Ark and Socialcam. There were plenty of graphs depicting skyrocketing user growth and revenue, and investors (as they typically do at YC demo day) ate it up.

This demo day … Read more

The startup accelerator boom...er, bubble

MOUNTAIN VIEW, Calif. -- The pace of startups popping up seems matched only by the emergence of new "incubators," or "accelerators," whichever word you chose to describe these startup boot camps that have cropped up across the country.

And Paul Graham, the man behind the grandaddy of them all, Y Combinator, barely pays attention to them. What he is convinced of, though, is that many will die, and that they're formed for the wrong reason.

"People are doing it because it's the cool thing to do," Graham told me during a break … Read more

The sound of crickets: VC offices on Y Combinator Demo Day

MOUNTAIN VIEW, Calif.--If you 're an entrepreneur looking for money today on the famous Silicon Valley venture capital row known as Sand Hill Road, yes, that is the sound of crickets you hear.

That's because today is Y Combinator Demo Day, and the lion's share of the biggest tech-oriented VCs in the Valley are packed into one auditorium here, listening to 65 early-stage companies pitch their wares.

The list is a veritable who's who of investors: Ron Conway, Tim Draper, Jeff Clavier, Mike Arrington, Stewart Alsop, and many, many others. And they've got their checkbooks … Read more

A demo pitch that resonated: 'We're Siri on steroids'

MOUNTAIN VIEW, Calif. -- The army of startups -- some 65 in all -- pitching a packed room of investors at Y Combinator's Demo Day today all begin the same way: Explaining what problem they're trying to solve.

Some resonate more quickly than others. That was the case with Sonalight. Its basic pitch is that it makes a better way to text and drive. This startup isn't even bothering with the idea that texting and driving might be a bad thing; it's taking as its starting point that people do just that.

Founder Curtis Liu, a … Read more

Startup SpringCoin aims to help those in debt

If one Y Combinator startup is successful, it might have just gotten a bit easier to get out of debt.

SpringCoin (formerly DebtEye), opens its online doors this morning with the noble intention of helping you, or possibly someone you know, get out of debt. No, SpringCoin won't pay your bills for you, but through a combination of its "smart-learning software" and human expertise, it will provide a detailed plan to get yourself out of debt.

SpringCoin isn't without competition, though. ReadyForZero, a fellow Y Combinator alum that also boasts an investment from Dave McClure of … Read more

Cooperative movie making on the iPhone

Flixlab is a free app for iPhone that lets you quickly make movies and share them with your Facebook friends without a lot of hassle. A recent feature update includes a cooperative movie-making mode: you'll now be able to take pictures and videos of an event with your friend and then quickly share and combine the content from both of your iPhones into one video.

Flixlab takes all the busywork out of making good-looking movies by adding all the effects, transitions, and music automatically before you share them with your Facebook friends. Simply follow the app's step-by-step process … Read more

The 404 961: Where we've got a Twitch in our eye (podcast)

There's plenty of live video broadcasting platforms to choose on the Web these days, but today we're chatting with one of the pioneers.

Justin Kan is one of the co-founders of Justin.TV, and he drops by our studio today for a full episode about the origins of life streaming and how the site paved the road to Justin's new project for live video gaming, TwitchTV.

We'll also talk to Justin about his participation in Y Combinator, a start-up incubator that helps green entrepreneurs through the first three months of genesis.

The boot camp gives founders the seed funding they need for general living expenses, allowing them to focus on the business idea. YC also guides them through the media pitching process and how to grab the attention of venture capitalists and seed investors.

Some of the headline-grabbing companies to grow from Y Combinator include Scribd, Loopt, Grubwithus, and Justin.TV itself.

Tune in to hear about how TwitchTV is bringing competitive gaming to a much larger audience, not to mention a few tips on what it takes to earn a spot in the next Y Combinator batch!… Read more

Toast your photos

PhotoToaster is an image editor with tons of preset effects and custom options to give your photos a stylized look. To "toast" a photo you can either take a new picture with your iPhone camera or choose an image from your photo library. Buttons across the bottom of the interface let you experiment with the different effects.

With PhotoToaster, you can use one of several global effects for a photo or use them as a starting point--this app lets you customize the effects to your liking using onscreen sliders. Global effects include retro looks, black and white effects, … Read more