Y Combinator cuts current cohort size by 40%, citing recession and funding environment – ​​TechCrunch

AND Combiner He says has intentionally reduced the number of startups within its accelerator for the summer batch of 2022. As first reported by 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 of 414 companies.

Y Combinator’s head of communications Lindsay Amos confirmed the reduction via text, saying the batch is still large “relative to the last five years of batches.”

“Batch S22 is significantly smaller than our most recent batches. This was intentional,” the statement says. Amos said the economic downturn and changes in the business financing environment caused YC to reduce the number of companies financed between W22 and S22. Many investors have argued that pre-seed and early-stage startups, the world where the YC accelerator primarily exists has been immune to macroeconomic stresses due to how far the scenario is from late-stage valuations. This latest move by YC illustrates that these early-stage companies are not immune to the effects of the recession.

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

“You can often gain significant market share in an economic downturn just by staying alive,” Y Combinator Top Startup Accelerator wrote in an internal email to its founders this week. The advice was one of 10 points in a memo intended to help businesses navigate the economy. recession crushing technology. Other notable quotes include “no one can predict how bad the economy will get, but things don’t look good.”

Email was a change of scenery from just a few weeks before when hundreds of Y Combinator startups, many of which have already raised venture funds, were introduced to the public on Demo Day. The startups were the first to receive Y Combinator’s new standard $500,000 check and aggressively focused on the international opportunity. Now, YC says that “this slowdown will have a disproportionate impact on international companies,” among others.

Today’s confirmation, ahead of the next Demo Day in September, shows how things have changed.

“We are constantly evaluating all aspects of our lots and the environment in which businesses will operate, and as a result, lot size has always varied from season to season and year to year,” Amos continued via text message.

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

Over the years, Y Combinator’s ever-increasing lot size has become a common conversation, if not a cliché, among techies. Some say Y Combinator’s bulky size has diluted the ability of entrants to stand out. Meanwhile, the institution last told the Newcomer tech blog that it could see itself powering 1,000 startups per batch someday. Amos said YC did not shrink because of criticism or the cost of his growing check size.

The move will no doubt help highlight those within the current cohort, simply due to a lack of competition. It’s another way YC is, even unwittingly, helping its startups get better marketing. a few weeks ago, Y Combinator announced the launch of YCa platform where people can sort accelerator startups by industry, batch, and release date to discover new products.

As I wrote at the time, Launch YC feels like Y Combinator’s strategically sound answer to one of the loudest criticisms of his model in recent years: As the size of your cohort has inflated, standing out in a pack is harder than ever. Today’s news, depending on how you look at it, could be another answer to questions about YC’s delivery effectiveness.

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

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