Y Combinator (YC), the startup accelerator and venture capital firm that has helped launch successful startups such as Airbnb, Stripe, and Dropbox, has announced that it will decrease its late-stage investing focus and cut jobs as a result.
Changes at YC https://t.co/FtQ7mxTdE8
— Garry Tan 陈嘉兴 (@garrytan) March 13, 2023
According to Garry Tan, President & CEO, YC has been known primarily as a place where very early founders create something from nothing by simply applying online and joining the world’s best founder community.
“With an average of six out of 100 startups in recent batches going on to make a billion dollars, YC has established itself as a leading player in the early-stage investing space. However, in recent years, YC has also ventured into late-stage investing,” Tan said .
However, late-stage investing turned out to be so different from early-stage that YC found it to be a distraction from its core mission. As a result, the firm will reduce its late-stage investing efforts, a decision that also causes the elimination of some roles on the late-stage investing team.
A total of 17 YC employees are affected by this decision.
“While it’s always hard to let people go, we believe it’s the right decision for YC,” Graham said. “We want to thank our late-stage investing team for their substantial contributions and help as we transition back to our early-stage focus.”
The reduction in late-stage investing may have some impact on YC’s operations, but the company reassured that it will not affect the companies it has funded or its interactions with alumni.
“There shouldn’t be any noticeable effect on the companies we’ve funded or on the way we interact with alumni,” Tan said. “If any companies or alumni have questions, I’m here and the YC group partners are here – as always, to help you make something people want.”
In recent years, YC has increased its investments in African startups, which have gone on to raise $1.5 more billion post YC. Some of the leading YC participants to emerge from Africa include:
With this shift in focus, YC says it will be staying true to its core mission of helping early-stage founders create successful startups.
“We think the best way we can help is by continuing to do what we’ve always done – helping founders at the earliest stages build the future.”
The news comes at a time when the technology sector is reeling from the collapse of three major banks Silvergate, Silicon Valley Bank (SVB) and the latest being Signature bank shut down by authorities in March 2023.