e-consultancy.com has a story on "Kiko" the Web 2.0 Calendar company that is putting itself up for sale on e-Bay for a reported sum of $50,000. While that in itself is interesting enough, the story gains traction when discussing the forces behind the funding of Kiko. It turns out that the company's funding came from a micro-cap investment by "Y-Combinator," a company that believes in the "Get scale, get business model, and get acquired," approach to building companies. Y-Combinator's web site begins:

Y Combinator is a new kind of venture firm specializing in funding early stage startups. We help startups through what is for many the hardest step, from idea to company.
We invest mostly in software and web services. And because we are ourselves technology people, we prefer groups with a lot of technical depth. We care more about how smart you are than how old you are, and more about the quality of your idea than whether you have a formal business plan.

Turns out that the management behind YC will throw a few dollars at almost any idea just to see what sticks - the shotgun spread approach to Web 2.0 investment. It will be interesting to see how successful the company is. e-consultancy.com writer, Chris Lake, does not think much of the idea:

Last month I threw a little mud at Graham, a notable entrepreneur, respected programmer and essayist, after he made some comments about a) geeks running businesses and b) there being no need to worry about a business model until a website achieves critical mass. I agree with Graham on a lot of things, but this sort of talk is downright dangerous.

I wonder if there are any Canadian VC firms taking this approach.