Editor's note: More and more, entrepreneurs are finding financial and intellectual help for their startups through accelerator or incubator programs. Portfolio.com will be breaking down these programs to help startup founders pick the right program.

What: Y Combinator

Where: Mountain View, California

Who: Paul Graham, who co-founded Viaweb and sold it to Yahoo! for $50 million, founded Y Combinator in 2005 to make small investments in startups. Among those on his team: Robert Morris, Graham's Viaweb co-founder; Paul Buchheit, the creator of GMail; and Trevor Blackwell, founder of Anybots and the creator of the first robot to stand on its own two feet. Among the program's graduates are vacation rental site Airbnb and Disqus, a tool for managing comments on websites.

Why: Founders of selected early-stage companies gain access to other entrepreneurs, receive mentorship and money, and get the opportunity to pitch venture capitalists. Plus, selected companies get bragging rights by being chosen by one of the highest-profile incubators in the country.

When: Y Combinator has funded 208 companies so far and takes its companies in two batches, with one running from January-March and another from June through August.

How: Application information can be found on the Y Combinator website. Partners invite the companies that seem most promising to meet them in person at Y Combinator's Mountain View headquarters. Offers to join are made immediately after those pitch sessions. But be warned, just 2 to 3 percent of applicants actually get into the program.

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Allan Grant, a founder of Curebit, took his social marketing platform for ecommerce stores though Y Combinator's winter session in 2011. The experience, according to Grant, was invaluable and he detailed how in an email to Portfolio.com:

• Mentorship—"They've seen every possible company and idea, so the pattern recognition abilities of YC partners is helpful in avoiding mistakes, figuring out what to focus on."
• Pedigree—"You can get a meeting with any angel or VC in the world, thanks to the YC brand."
• Fellowship—"You can get advice in minutes on important topics, get intro'd into any company. the mailing list is power."
• No time wasted—"Using standard YC documents for incorporation, fund raising, hiring makes it easy to get stuff right without spending a lot of time and money."
• Laser focus—"Paul Graham constantly pushes people to work on that which matters most—traction. He can recognize when something is the right or wrong thing to focus on before we do. Paul's mind works at light speed, and coupled with having seen hundreds of startups go through the same steps—his intelligence is applied to helping people avoid mistakes made by others in the past."

Grant is now a graduate of perhaps the best known incubator program. Founded by Paul Graham in 2005, Y Combinator is less interested in providing office space to startup companies and more on funding batches of those companies and opening doors for them. Graham was convinced that his method of funding companies, generally with no more than $20,000, and providing support would be a more efficient way to grow new companies than other methods.

“Paul noticed before anybody else that the cost of these companies was near zero,” Harj Taggar told Portfolio.com. “It’s just the cost of your time to do it.” Taggar was so high on the model that after he sold his own YC-backed company, Auctomatic, an auction and marketplace management system, that he joined the Y Combinator selection team.

Among the companies that have emerged from Y Combinator are Airbnb, a company that allows people to rent their property for a short time to vacationers; Dropbox, a company that allows users to store music, photos and documents online; and reddit, a service for personalizing the web reading experience that was later sold to Portfolio.com sister company Condé Nast.

Not everyone has had glowing reviews for the Y Combinator model or Graham, though. Some of the criticisms, as outlined by Read Write Web:

Paul Graham calls for young smart people to start their own startups. So in some sense, he's offering quick cash dreams against a long academic career. These dreams may cause young people to drop out of college for a very risky web business.

Another criticism Graham gets is the high equity stake he typically takes in return for a very low investment, like $20K. But the Paul Graham name is more than enough for most startups to be taken more seriously - so besides the money he puts in, he also injects his business and marketing power to these startups.

And the final criticism some people throw at Graham is a perceived lack of quality in many of his Y Combinator ventures—due to inexperienced, very young teams. This could also be a result of Graham's "release early, release often" principle.

Those criticisms have some validity when you consider the trouble that Airbnb has run into with renters complaining that customers weren't properly vetted and wound up trashing their houses.

But on the other hand, the Y Combinator model has produced companies like Taggar's that have sold, and has given companies like Grant's, started in a Berkeley house with two other hackers, a key boost.

For Graham and his team, the criticism doesn't seem to have had much impact. The mission today is largely the same as when the project started. Here's part of the Y Combinator philosophy, taken from its site:

Our goal is to be the preferred source of seed funding, and to be that we have to do right by everyone. The good hackers all know one another, so if the groups we fund feel they're getting a bad deal, no one will want funding from us in the future. And later stage investors (especially VCs) also tend to know one another, so if the companies we seed end up being broken in any way, no one will want to invest in them in the future.

So far we seem to be on track, because both the startups we've funded and their next round of investors seem happy with us.

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Kent Bernhard Jr. is News Editor of Portfolio.com