Y Combinator is planning to reduce investments in late-stage companies, which has resulted in the loss of jobs for 17 team members, approximately 20% of its workforce, as stated in a release on Monday. The accelerator clarified that Silicon Valley Bank’s collapse did not influence their decision, and that they had been discussing the transition long before it occurred. It is worth noting that more than 30% of Y Combinator’s startups are affected by SVB.
Tan expressed his concerns on Twitter about the potential consequences of the current SVB crisis on startups, stating that it could result in a setback of 10 years or more for innovation and the startup ecosystem. He emphasized that big tech companies may not be affected by this crisis due to their existing cash reserves, but it could spell disaster for smaller startups who are the potential Google and Facebooks of tomorrow. Tan also created a petition that has garnered support from over 5,000 tech CEOs and founders, urging congress to intervene and provide support for the entrepreneurial community.
According to a memo written by YC CEO Garry Tan, the accelerator’s main objective is early-stage investing and it considers late-stage investing to be a “distraction” from its core mission. Tan further stated that YC’s decision to reduce late-stage investments would not impact its funded companies or alumni interactions. However, he encouraged companies or alumni with any questions to reach out to him or YC group partners, who are always available to assist in creating desirable products.
Y Combinator is a startup accelerator and seed-stage venture capital firm based in Mountain View, California. It provides funding, mentorship, and resources to early-stage startups in exchange for equity in the company. Y Combinator has a well-established reputation and has helped to launch many successful companies, including Airbnb, Dropbox, Reddit, Twitch, and Stripe. It is one of the most prominent startup accelerators in the world and is highly regarded in the tech industry.