Y Combinator cuts current team size by 40%, citing slowdown and funding environment – TechCrunch

Y Combinator says For the summer 2022 batch, it has deliberately reduced the number of startups in the accelerator. As first reported by The Information and independently verified by TechCrush, Y Combinator’s Summer 2022 cohort — currently active — boasts nearly 250 companies, a 40% drop from the previous cohort, which landed at 414 companies.

Lindsay Amos, Y Combinator’s head of communications, confirmed the decline in texting, saying the group is still large “in terms of bachelors over the last five years.”

“The S22 batch is significantly smaller than our recent batch. This was intentional,” the statement read. Amos says that the economic downturn and changes in the venture funding environment have caused YC to reduce the number of companies funded between W22 and S22. Many investors argue that the YC accelerator is largely immune to macroeconomic tensions in a world of pre-seed and seed-stage startups because of how the platform has been removed from valuations of late. This latest move by YC shows that such early-stage companies are not immune to the effects of the downturn.

In May, the accelerator advised its portfolio founders to “plan for the worst.”

Top startup accelerator Y Combinator wrote in an internal email to its founders this week that “you can often survive and take significant market share in an economic downturn.” The advice was one of 10 points in a memo to help companies explore recession-busting technology. Other famous quotes include “No one can predict how badly the economy will hurt, but things don’t look good.”

Email was a dynamic change a few weeks ago, when hundreds of Y Combinator startups — many of which had already raised venture funding — pitched themselves to the public on pitch day. The startups were the first to receive Y Combinator’s new $500,000 regular check and are highly focused on the global opportunity. Now YC is saying, “This slowdown will have a disproportionate impact on global companies.”

Today’s confirmation, ahead of a test date in September, shows how things have changed.

Amos continued in a text message “We are constantly evaluating all of our teams and the environment in which the companies operate, and as a result, the size of the team will always vary from season to season and year to year.”

It’s unclear if Y Combinator will continue to operate in a more focused capacity with future cohorts. In response to a query, Amos said that YC has started accepting applications for the next batch and will review “our group size and the environment in which the companies operate to determine the group size”.

Over the years, Y Combinator’s ever-growing batch sizes have become a common — if not cliché — conversation among techies. Some say that Y Combinator’s bloated size has made participants stand out. The institute, for its part, last told tech blog Newcomer that it could see it move 1,000 startups in a single day. Amos said YC didn’t back down because of criticism or the rising cost of check volumes.

The move will only help those in the current squad stand out due to lack of competition. YC is another way to help startups get better marketing, even if they don’t know it. A few weeks ago, Y Combinator announced the launch of YC, where people can identify startups by industry, batch, and launch date to find new products.

As I wrote at the time, launching YC feels like Y Combinator’s strategically correct answer to one of the biggest criticisms of the model in recent years: that it’s harder than ever to stand out in a crowd as the size of the group explodes. Today’s news, however you look at it, may be another response to questions surrounding the effectiveness of YC distribution.

Current Y Combinator team participants can contact Natasha Mascarenhas by email at natasha.m@techcrunch.com or via Signal, the secure encrypted messaging app, at 925 271 0912.

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