Despite economy, new start-ups retain optimism

MOUNTAIN VIEW, Calif. -- With many established businesses just trying to survive, you might not think it's a good time to start a company, let alone ask anyone for money to help get it rolling. But if a series of presentations from fledgling Silicon Valley start-ups is any indication, innovation is not braking for the recession.

Over three hours Wednesday, more than a dozen start-up founders — most of them in their 20s — gave rapid-fire talks to a group of peers, journalists and potential investors about their companies.

Many of these start-ups are just a few months old, and some have not yet launched. Those on display ranged from an online marketplace selling gourmet treats to a company offering Web-based voice conferencing. Another is developing dating applications for the iPhone.

The presentations comprised "Demo Day," an event held twice a year by Mountain View-based Y Combinator, which provides start-ups with small amounts of initial funding (usually $5,000, plus $5,000 per founder) in exchange for small ownership stakes. Since its inception in 2005, Y Combinator has funded about 40 start-ups each year; it hopes to use a recent $2 million infusion from venture capital firm Sequoia Capital and other investments to bump the number up to 60 per year.

The start-ups on display, all of which were funded by Y Combinator in January, had the same goals: Show people what you've been working on, and possibly get some money from an angel investor or venture capital firm to take your idea to the next level.

Paul Graham, a Y Combinator partner, said the financial boosts start-ups might garner after Demo Day vary. Some could raise as little as $50,000, while others might make deals for more than $1 million, he said, even though the economy has made it hard to raise larger amounts of funding — say, $3 million.

Jay Moon, 30, took the opportunity to introduce people to the gourmet retail site he co-founded, Foodoro. He thinks of the site as "Etsy for food" — Etsy.com is a Web marketplace for handmade goods.