Summer funding for start-ups

‘Tis the season…to apply for funding to start a company this summer.

These days, March is apparently the season for young innovators to apply for start-up financing for the summer. Y Combinator, TechStars and DreamIt Ventures all have deadlines within the next ten days for their summer programs for very early-stage high-tech start-ups.

The idea behind all three organizations? To match would-be entrepreneurial teams who have an idea with expertise and a very modest amount of financing  —  in hopes of getting some of the start-ups to the next stage, where they may interest more traditional venture capital or angel investors. For example,  Y Combinator’s website says the organization typically invests $5000 per participating founder, plus an additional $5000 (so a team of three, for instance, gets $20,000 for the summer) and takes a median equity stake of 6%. Y Combinator invests “mostly in software and web services.”

Not all such really-early-stage investors operate on a summer cycle, however; for example, Founders Co-op in Seattle has a somewhat similar target market — combining  very early-stage start-ups in software and web services with expertise and a small amount of capital, ranging from $10,000 to $250,000 — but no fixed summer schedule. And Y Combinator also funds a group of start-ups in a program that starts in January.