Y Combinator warns its startups to prepare for the worst

American startup accelerator Y Combinator sent out a note to its startup partners, warning them "to plan for the worst."

Y Combinator warns its startups to prepare for the worst

Friday May 20, 2022,

2 min Read

Famed startup accelerator Y Combinator has sent out a note to its alumni network of startups warning them of the coming economic downturn, and the funding consequences that may effect even the best startups.

The note, reviewed by the Economic Times, said, “If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn. Remember that your chances of success are extremely low even if your company is doing well... We recommend you change your plan."

A recent plunge in tech stocks and global markets, ongoing supply chain shortages due to the pandemic, the Russia-Ukraine war, and the American Fed's decision to increase interest rates for the first time in years in March have all contributed to a bear run in the market that many are predicting to be the next major economic downturn.

As such, investors and startup enablers such as Y Combinator have also advised that you should take any money you can at the moment, and focus on survival for the next few months.

“The safe move is to plan for the worst. If the current situation is as bad as the last two economic downturns, the best way to prepare is to cut costs and extend your runway within the next 30 days. Your goal should be to get to Default Alive," said the Y Combinator note.

Edited by Affirunisa Kankudti