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

Y Combinator says it intentionally reduced the number of startups within its accelerator for the summer 2022 batch. As first reported by The Information and independently verified by TechCrunch, Y Combinator’s summer 2022 cohort – currently in action – has nearly 250 companies, down 40% from the previous cohort, which landed in 414 companies.

Y Combinator’s communications manager, Lindsay Amos, confirmed the discount via text message, saying the bundle is still large “compared to the last five years of bundles.”

“The S22 batch is significantly smaller than our most recent batches. It was intentional,” the statement read. Amos said the economic downturn and changes in the venture capital funding environment caused YC to reduce the number of companies funded between W22 and S22. Many investors have argued that pre-seed and early-stage startups, the world where YC’s accelerator primarily exists, have been immune to macro stresses due to the stage’s remoteness from late assessments. This latest initiative from YC shows that these start-ups 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 by simply staying alive,” leading startup accelerator Y Combinator 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 overwhelming technology of the economic downturn. Other noteworthy quotes include “no one can predict how bad the economy will get, but things don’t look good.”

The email was a change of mood from a few weeks prior, when hundreds of Y Combinator startups — many of which had already raised venture capital — showed up to the public on Demo Day. Startups were the first to receive Y Combinator’s new standard $500,000 check and have been aggressively focusing on international opportunities. Now, YC says “this downturn will disproportionately impact international businesses,” among others.

Today’s confirmation, ahead of an upcoming demo day in September, shows how things have changed.

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

It’s unclear if Y Combinator will continue to work in a more focused fashion in future batches. When asked, Amos said YC has just started accepting applications for the next batch and will assess “all aspects of our batch and the environment in which the businesses will operate to determine the size of the batch.”

Over the years, Y Combinator’s ever-increasing lot size has become a common, if not cliché, conversation among techies. Some say Y Combinator’s bloated size watered down participants’ ability to stand out. The institution, meanwhile, last told tech blog Newcomer that it could see itself batch-feeding 1,000 startups one day. Amos said YC hasn’t cut because of criticism or the cost of its growing check sizes.

This decision will certainly help those in the current cohort to stand out, simply due to the lack of competition. It’s another way YC, albeit unintentionally, is helping its startups get better marketing. A few weeks ago, Y Combinator announced Launch YC, a 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 strongest criticisms of its model in recent years: as its cohort size has swelled, standing out within of a lot is harder than ever. Today’s news, depending on how you view it, could be another answer to questions about YC’s distribution effectiveness.

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

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