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Y Combinator narrows current cohort size by 40%, citing downturn and funding

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Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#121

Post by rexreed »

I_am_tiberius wrote: post #81
q-big wrote: post #77

Earlier quoted context omitted.

> I always find it amazing that applicants only have 10 minutes to present themselves. Consider this as a strong sign that YC is looks for companies that are an "easy sell" to VCs (the same holds for products that such companies produce). You can easily guess why they want that ...

They always say that what matters most to them is the founders. How can they learn to know people in 10 minutes?

What they tell you and what the reality truly is, are very different things. Venture capital is a hustle, and once you learn how to dance the hustle you can find a partner.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#122

Post by Ericson2314 »

woweoe wrote: post #14
ShivShankaran wrote: post #10

Earlier quoted context omitted.

It's actually a bad thing. Just like cryto all the YC companies sell to each other. As per their 2022 stats, more than 50% of sales for all YC startups are other YC companies. So this is just a game of hot potato until they get a fat valuation, raise a zillion dollar series and then list it on the stock market for the retail traders to hold their bags. Less YC startups= less customers for other YC startups.

This is something that people fail to understand about economics. The vast majority of wealth is created by the faster movement of money - Japan went into a period of stagflation because savings rates rose in order to cover loan defaults. A yen doing the 5 rounds in a family of three could buy 15 yen worth of goods.

That is true, but consumption is supposed to be part of the loop. If a bunch of B2B companies are paying each other no B2C or C involved it's pointless economic activity and Ponzi-esque

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#123

Post by JumpCrisscross »

__alexs wrote: post #65
cortesoft wrote: post #31

Earlier quoted context omitted.

Even if you think things will look good in 10 years and want to build a company to succeed at that time, you still need the money NOW if you want to invest in a company now, and the availability of money for investment now is completely dependent on the current financial markets. In other words, the amount of money available to invest is independent of the fundamentals of what that money is invested in.

Are VCs funded by debt? I thought the funds would largely have come from existing cash or equities and were only down 15% from ATH on SPY. Is this just people being risk averse right now?

> Is this just people being risk averse right now?

VC historically yielded 12 to 18% [1]. There is a lot of variance in those figures, with the crypto + Clubhouse guys coming in below ten, savvier funds still posting 30%+ and SoftBank + Tiger losing money.

So when a bond is yielding 5 pts [2] above the 10-Treasury’s 2.75% [3], more people will chose 7 or 8% with the guarantee of the issuer’s assets over maybe twenty maybe zilch.

[1] https://www.nexitventures.com/site2015/wp-content/uploads/20...

[2] https://fred.stlouisfed.org/series/BAMLH0A0HYM2

[3] https://home.treasury.gov/resource-center/data-chart-center/...

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#124

Post by JumpCrisscross »

rishav_sharan wrote: post #90
woweoe wrote: post #53

Earlier quoted context omitted.

In my opinion the pandemic era saw a significant increase in employee headcount, and now we are seeing a "correction" of the employee headcount. But I think the bigger point is that venture capital funding is really drying up and investors aren't investing as much. A lot of the market is basically "taking a loan to cover a loan that covers a loan.." and the market is no longer giving out loans as easily due to higher…

> In my opinion the pandemic era saw a significant increase in employee headcount I am interested in hearing why you think that. I would have thought that the whole "Great Resignation" theme of the two pandemic years would suggest that people are instead looking to move away from the established companies.

> the whole "Great Resignation" theme of the two pandemic years would suggest that people are instead looking to move away from the established companies

That period was characterised by easy money boosting the job pool relative to applicants. Employees had heightened mobility and many capitalised on the opportunity. That window is now closing, with firms focussing on survival over growth.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#125

Post by htrp »

dustingetz wrote: post #115
balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

> Earlier folks / seed funds have more than enough money and even if they take hits on marks the reality is that they invest at such low prices they are still 'good', but (a) they don't know exactly what to buy because they don't know what the later-stage folks are in the market for and (b) they really don't know what prices the later-stage folks will pay for things (which directly impacts what they are willing to pa…

> See: "Series A Exit Clause" – it's baked into your capitalization structure

Thanks! Learn something new everyday

[1]https://startupjuncture.com/2017/05/16/vc-deal-terms-explain...

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#126

Post by f0e4c2f7 »

nequo wrote: post #120
f0e4c2f7 wrote: post #116

Earlier quoted context omitted.

Or that you expect a downturn that will last more than 10 years. Check out how the 10 year T note has been performing against the 2 year. Markets are not optimistic about the long term.

There was that headline that half of all Americans are expecting a civil war. Or maybe it’s the on-going showdown with the CCP. Or Russia’s disqualification of itself as an energy supplier. Or maybe it is climate change? Seriously, what’s driving these market trends, I don’t know.

Ray Dalio wrote a book theorizing about some of these possibilities. I haven't read it yet but this video summary of it is pretty interesting.

https://youtube.com/watch?v=xguam0TKMw8

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#128

Post by quadcore »

I_am_tiberius wrote: post #68

I always find it amazing that applicants only have 10 minutes to present themselves. If I only had 10 minutes, I'd be nervous as hell and it would not give a true representation as me as a person and my project - unless the nervousness factor is a key decision factor as well.

If I only had 10 minutes, I'd be nervous as hell

Being a startup founder will give you harsher obstacles to overcome than that. The world is tough and unjust. Founding a company is not for everybody. You gota be a nerd and a tough person at the same time.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#129

Post by oneoff786 »

balaselvam wrote: post #20

The emphasis on "downturn" concerns me. Aren't reputed firms like YC supposed to look at a 10+ year horizon? If this is true, it indicates that earlier investments were based on the market than the fundamentals of the founding team, market, and product.

Money is more expensive with higher interest rates.

Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding

#130

Post by Spooky23 »

yunohn wrote: post #98
q-big wrote: post #75

Earlier quoted context omitted.

> at some point in their process they borrow money I would be somewhat careful with such claims. As an investor who has money available, you have two options (in this example) where none involve borrowing money: a) invest in some startups b) lend this money to other entities Increased market interest rates mean that b) becomes more attractive. In other words: the startups that you invest in for a) have to be much mor…

Sure, but we’re talking about a VC fund. I’m not convinced that YC reduces investing in startups to pivot and profit from increased lending rates.

YC is qualifying and preparing startups for VC. If the funnel is narrowing at the end, it doesn’t make sense to put more companies into it.
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