* Record turnout underscores investor mania

By Gerry Shih

MOUNTAIN VIEW, Calif., March 28 (Reuters) - The most popular show in Silicon Valley moved to the big stage this week, and the money followed.

A record 450 investors, entrepreneurs and reporters squeezed into a packed hall in the Computer History Museum in Mountain View to hear pitches from 66 teams: the latest class of the Y Combinator incubator program, deemed one of the most selective and closely watched startup boot camps in the world.

Y Combinator's "Demo Days" have grown into fixtures on the Silicon Valley calendar, a geek version of the Kentucky Derby, where tech investors come to see and be seen -- and to place bets on the perceived studs of the startup scene.

Founder Paul Graham has built a track record of molding his young charges into success stories like Dropbox, a digital file-storage company that has been valued at $4 billion, and AirBnB, a home-rental service worth $1 billion.

For the first time, he condensed the event into a single day and moved the presentations out of Y Combinator's cramped Mountain View offices and into the museum.

The expansive new setting and record turnout underscored how Silicon Valley is in the throes of an investment frenzy. Startups were flooded by funding offers, ratcheting up pressure on investors to snatch a slice of a company, any company, that could turn out to be the next Facebook.

"We're in that angel-investing hype cycle," said Daniel Ahn, managing director of Voyager Capital. "For a lot of the angels, this is the one period where you have a shot to get in on some of these deals."

The museum was a hive of deal-making on Tuesday.

Fresh-faced founders rattled off pitches to huddled angel investors while partners at the toniest Sand Hill Road firms, like Draper Fisher Jurvetson and Kleiner Perkins Caufield and Byers, stalked the conference rooms.

Onstage, startups like Exec, a job outsourcing service; Sonalight, a voice-recognition texting app, and iCracked, an iPhone repair company, drew applause.

SPIT AND POLISH

Long-time attendees said the pitches appeared more polished. Entrepreneurs presented slick charts illustrating explosive, "hockey stick" user growth, and many compared their companies to alumni that had hit the big time, like Dropbox or AirBnB.

In recent years, prominent angel investors like Dave McClure of 500 Startups and Thomas Korte of Angelpad have fired up their own incubators. But Y Combinator's ultra-low acceptance rate makes elite universities seem indiscriminate by comparison.

"Stanford is still 8 percent, Y.C. is what, 2.5 percent?" Min Ming Lo, a Y Combinator entrepreneur who recently completed a masters at Stanford University, said as he walked through the museum on Tuesday, handing out business cards before his team's presentation. "You have the best connections. You have the best advisers, the best possible program."

At Tuesday's outset, Graham encouraged investors to log into a software program to schedule side meetings with startups in real time, lest they miss out on the hottest deals.

"Some of those hotter rounds are going to fill up today," Graham warned the packed hall. "I would suggest if there's one you like, there's all the likelihood you want to click on that button and arrange to meet with them today."

Some investors at larger firms privately grumbled about the competitive atmosphere, but others denied they were under any pressure at all.

"It's a long-term relationship," said Andrew Parker from Spark, a Boston-based venture capital firm that has invested in companies like Twitter. "We could never make a decision in a day. The companies that are going to be hot today are not necessarily going to be hot in five, 10 years."

Parker, who flew out from Boston, said he felt as if there were more venture capitalists based on the East Coast milling around the hall than locally based investors.

"It's our chance to meet some of this amazing talent," he said. "We're just looking to get to know bright founders here."

Bulent Tekmen, a Turkish entrepreneur who began his foray into angel investing three years ago, learned first-hand the need to be quick on your feet.

While guests noshed on pasta and curry chicken during the lunch break, Tekmen hovered anxiously near a gaggle of angels, awaiting his turn to woo the two co-founders of a hot cloud simulation startup.

But as soon as he turned to speak to a reporter, an investor from an established venture capital firm swooped in and confidently struck up a conversation with the pair.

"This is harsh," Tekmen said, laughing. "It's like there are lots of sharks and you have to be more edgy than them to invest. If you don't, the big names will catch your investment opportunity, your prey."

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