Potentially disrupting the established practices of angel investing, investors Yuri Milner (pictured) and Ron Conway have teamed up to offer a blanket investment to every new startup from the Y Combinator incubator.

Milner heads Russian investment firm DST (once known as Digital Sky Technologies) and he disrupted venture capital practices when he made investments in Facebook, Zynga and Groupon at very high valuations and easy deal terms. Milner didn’t even ask for seats on the board of directors of those companies. In hindsight, his investments look brilliant because all have risen in value, at least on paper. Conway runs the SV Angel investment fund.

Techcrunch reported that Milner (acting as an individual investor) and Conway’s fund are going to invest in every single Y Combinator startup, with some 40 startups in the latest class. Their new fund is called Start Fund and is being managed by SV Angel’s David Lee. The bold bet is that they are investing in these startups sight unseen, with an offer of $150,000 in convertible debt. There is “no cap and no discount,” which Techcrunch says are terms that no angel will match. It means that the Start Fund will loan each company $150,000, and that money will convert into equity when the startup raises money from other sources. The debt has no valuation ceiling and does not get a discount on the conversion.

Each startup can choose to take the investment or decline it. The fund will offer the same deal for each Y Combinator in subsequent classes as well. That’s a big vote of confidence in Y Combinator’s ability to pick entrepreneurs. Typically, Y Combinator startups get $15,000 to $20,000 during the first few months of their projects. Paul Graham, co-founder of Y Combinator, told Techcrunch he was pleased with the new investment strategy. But other angels may cringe because they will have to match the generous terms offered by Conway and Milner or lose deals.

DST has poured hundreds of millions of dollars into hot social companies Facebook, Zynga and Groupon. But it made those investments when the companies were in relatively late stages of maturity, just as they were poised to go public. DST can pour so much money into the companies that they don’t have to worry about raising money and can postpone their IPOs for a year or two. In doing this, DST works with the companies to buy 80 percent of the shares from secondary sources, such as employees or early investors who want to cash out, and only 20 percent from the primary share owners.

That strategy involves a lot of risk, because it requires that DST come up with a ton of capital. But Milner has had no trouble with that. Earlier this year, he restructured the investment firm’s holdings so that its Russia-specific email, social and game businesses were all in one company, Mail.ru. That enabled Mail.ru, where Milner serves as chairman, to go public. Milner now runs the business of the global investment fund, DST, which is the entity that holds large stakes in Zynga, Facebook and Groupon.

The businesses all have potential for conflicts of interest. Zynga, the dominant player on Facebook, doesn’t always see eye to eye with the social network. Those dynamics make for the classic tensions between a platform owner and the platform’s major applications company, Milner said. But Milner avoids conflicts by refusing to take a seat on company boards, even though he has big stakes in each of the companies.

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