Y Combinator Limits Current Cohort Size by 40%, Citing Downturn and Funding Environment – TechCrunch

Y combiner says It intentionally reduced the number of startups in its accelerator for summer 2022. As first reported by The information and independently verified by TechCrunch, Y Combinator’s Summer 2022 cohort – currently in action – features nearly 250 companies, down 40% from the previous cohort, which landed at 414 companies.

Y Combinator communications director Lindsay Amos confirmed the reduction via text message, saying the batch is still large “compared to batches over the past five years”.

“The S22 batch is significantly smaller than our most recent batches. That was on purpose,” the statement said. Amos said the economic downturn and changes in the venture finance environment caused YC to reduce the number of companies funded between W22 and S22. Many investors have argued that pre-seed and seed-stage startups, the world in which YC’s accelerator primarily exists, have been immune to macroeconomic tensions because the stage is removed from late-stage valuations. 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 creators to “assume the worst.”

“You can often gain significant market share in an economic downturn just by staying alive,” top startup accelerator Y Combinator wrote in an internal email to its founders this week. The advice was one of 10 bullet points in a memo designed to help companies navigate the economic downturn that is wiping out technology. Other standout quotes include: “No one can predict how bad the economy is going to get, but things aren’t looking good.”

The email marked a shift in sentiment from just weeks earlier, when hundreds of Y-Combinator startups — many of whom had already raised venture capital — made public appearances on Demo Day. The startups were the first to receive Y Combinator’s new standard $500,000 check and aggressively focused on international opportunities. Now YC says that “this slowdown will have a disproportionate impact on international companies,” among other things.

Today’s confirmation ahead of an upcoming Demo Day in September shows how things have changed.

“We are constantly evaluating every aspect of our batches and the environment in which the companies will operate, and as a result batch sizes have varied from season to season and from year to year,” Amos continued via text message.

It’s unclear if Y Combinator will continue to be more focused in future batches. When asked, Amos said that YC has just started accepting applications for the next batch and will “evaluate every aspect of our batch and the environment in which the companies will operate to determine batch size.”

Over the years, the ever-increasing batch size of Y Combinator has become a common – if not cliche – conversation among technicians. Some say Y Combinator’s bloated size has diluted contestants’ ability to stand out. The institution recently announced this to the tech blog Newcomer it could imagine running 1,000 startups per batch one day. Amos said YC didn’t scale back due to criticism or the cost of its growing check size.

The move will certainly help those within the current cohort stand out simply due to the lack of competition. In this way too, albeit unintentionally, YC helps its startups achieve better marketing. A few weeks ago, Y Combinator announced launch YCa platform where people can sort accelerator startups by industry, batch and launch date to discover new products.

As I wrote at the time, Launch YC feels like Y Combinator’s strategically sound response to one of the loudest criticisms of its model in recent years: With its cohort size bloated, it’s harder than ever to stand out within a group. Today’s news, depending on how you view it, could be another answer to questions about YC’s sales efficiency.

Current Y Combinator cohort participants can contact Natasha Mascarenhas via email at [email protected] or via Signal, a secure encrypted messaging app, at 925.271.0912.

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