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In on the Biotech

Start-up accelerator Y Combinator has invested in a number of web-based companies, including Airbnb and Dropbox, and it is now bringing its model of investing a few thousand dollars in a company at its early stages to the biotech realm, Nature reports.

A few years ago, Nature notes, Y Combinator founder Paul Graham said that investing in biotech companies was too expensive, but in this Q&A Sam Altman, the president of the company, now argues that the cost of a biotech startup is becoming similar to that of a software startup.

"I think the fundamental changes that are happening in the biotech space are like the changes that happened for software startups with the introduction of Amazon Web Services. … Previously, you needed significant investment in physical infrastructure to start a firm," adds Elizabeth Iorns, a part-time partner at Y Combinator and co-founder of Science Exchange. "Then all of a sudden you could just turn on servers."

Altman adds that, going forward, Y Combinator will invest $120,000 per company for a 7 percent share. "It's not a huge amount of money, but it's quite a bit more," he says, than its previous $17,000 investments. "Part of the design goal is for companies that have more costs than just software, as biotech companies may, to be able to get a lot further."

He and Iorns add that Y Combinator has backed companies such as Benchling,, the Immunity Project, and Iorn's Science Exchange.