Y Combinator to layoff 20% staff, decrease late-stage investing

US-based technology startup accelerator Y Combinator—known for its early-stage funding—has said it will decrease the amount of late-stage investing, as it "found it to be a distraction from our core mission," President and CEO Garry Tan said in a blog post.

The company also said it will lay off roughly 20% of its staff.

“In recent years, we have done some late-stage investing. But late-stage investing turned out to be so different from the early stage that we found it to be a distraction from our core mission. So we’re going to decrease the amount of late-stage investing we do,” Tan wrote in the post.

“Unfortunately, this means we will no longer need some of the roles on the late-stage investing team. Seventeen of our teammates are impacted today. As we make this change in strategy, we want to acknowledge and express our appreciation for their substantial contributions,” he added.

Also Read

Y Combinator’s Arnav Sahu confident early-stage deals will remain active through funding winter

While the announcement follows the downfall of the Silicon Valley Bank (SVB), the accelerator told TechCrunch that it was planning the shift "well before” the collapse. Over 30% of Y Combinator startups are exposed to SVB.

As per the blog post, there shouldn’t be any noticeable effect on the companies funded by Y Combinator or how it interacts with alumni.

Some of the Indian startups backed by YC Continuity—the growth-stage investment fund of Y Combinator—in late-stage funding are Groww, Zepto, Razorpay, and KhataBook, among others.

Meanwhile, Anu Hariharan and Ali Rowghani, the partners who led the fund, are planning to leave the firm and plan to set up a new fund together, The Information reported.

Launched in March 2005, Y Combinator has invested in over 4,000 companies, including Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Quora, PagerDuty, Reddit, Stripe, and Twitch. The combined valuation of the top YC companies was over $600 billion in January 2023.

Y Combinator interviews and selects two batches of companies per year, where these companies receive a total of $500,000 in seed money and advice and connections.