Y Combinator is feeling the pain: “Y Combinator Slashes Startup Accelerator Class Size by 40%”. . When limited partners feel like the economy is crashing or recession is on the way, they send limited funds to general partners who then make limited investments in startups. As the loop circles all the way, funding dries up. That is what is happening in YC. If you run a startup, check your burn-rate because it is going to become harder to raise money before the outlook changes.
Y Combinator has cut the number of startups it is funding and training this summer by about half compared to its winter program, a spokesperson confirmed. The famed Silicon Valley accelerator responded to a downturn in the economy and in venture capital funding in reducing its class size.
The move means as many as 250 companies will pitch themselves to potential investors in early September at Y Combinator’s virtual demo day, a biannual rite of passage that helped launch DoorDash and Coinbase. A smaller class could make it easier for graduates to raise money by lowering the competition for investor attention. The downsizing also follows mounting criticism that Y Combinator had grown too large, damaging its reputation for churning out Silicon Valley’s best startups.
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