Y Combinator narrows existing group size by 40%, citing downturn and funding environment – TechCrunch

Y Combinator says It has deliberately scaled back the number of startups within its accelerator for the Summer 2022 group. As information first reported and independently verified by TechCrunch, Y Combinator’s Summer 2022 group – currently underway – includes approximately 250 companies, down 40% from the group Previous, which landed in 414 companies.

Y Combinator’s head of communications, Lindsay Amos, confirmed the reduction in text messages, saying the batch was still significant “relative to the past five years of batches.”

“The S22 group is much smaller than our latest groupset. This was intentional,” the statement read. Amos said the economic downturn and changes in the project financing environment caused YC to reduce the number of funded firms between W22 and S22. Many investors have argued that pre- and seed-stage startups, the world in which the YC accelerator is primarily located, were immune to macroeconomic tensions due to how far the stage is away 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 his portfolio founders to “plan for the worst.”

“You can often capture a significant market share in an economic downturn simply by surviving,” Y Combinator, one of the leading accelerators of startups, wrote in an internal email to its founders this week. The advice was one of 10 points in a note aimed at helping companies weather an economic downturn that is crushing technology. Other notable quotes include “Nobody can predict how bad the economy will be, but things just don’t look good.”

The email was a paradigm shift just a few weeks ago, when hundreds of Y Combinator startups — many of which have already raised project funding — presented themselves to the public on demo day. The startups were the first to receive a new record check of $500,000 from Y Combinator and focused heavily 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 the next 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 size has always varied from season to season and from year to year,” Amos continued by text message.

It’s not clear if Y Combinator will continue to operate in a more focused capacity in future batches. When asked, Amos said that YC is just beginning to accept applications for the next batch and will assess “every aspect of our group and the environment in which companies will operate to determine batch size.”

Over the years, Y Combinator’s ever-growing batch size has become a common – if not cliched – conversation among techies. Some say the inflated size of Y Combinator reduced participants’ ability to stand out. Meanwhile, the foundation told tech blogger Newcomer it could see itself supporting 1,000 startups per batch one day. Amos said YC has not held back because of the criticism or the cost of the increased check volume.

This move will definitely help those in the current group stand out, simply because of the lack of competition. It’s another way YC helps its startups get better marketing, even if it’s unintentionally. A few weeks ago, Y Combinator announced the launch of YC, a platform where individuals can sort accelerator startups by industry, batch, and launch date to discover new products.

As I wrote at the time, Launch YC seems like a strategically sound answer from Y Combinator to one of the loudest criticisms of its model in recent years: With group size ballooning, standing out within a group is harder than ever. Today’s news, depending on how you see it, could be another answer to questions about YC’s distribution effectiveness.

Existing Y Combinator group participants can contact Natasha Mascarenhas by email at natasha.m@techcrunch.com or on Signal, a secure encrypted messaging app, at 0912 925271.

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