I wonder which sector (fintech, web3, etc) saw the biggest cut.
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
#42Investors just want a faster return in a high interest rate environment. If they can put money into super low risk things like bonds and get 3, 4, 5%+ then startups have to be beating that
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#43I wonder which sector (fintech, web3, etc) saw the biggest cut.
these are not sectors but specific subindustries. to an investor there is no difference as they are almost perfecty correlated, as shown by this news piece
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#44Earlier quoted context omitted.
$125k * 400 companies/batch * 2 batches/year = ~$100 million/year deployed just during the batches. On top of that, they often participate in later funding rounds to maintain their 7% stake. Also, it takes a long time for those investments to generate cash. Many of the most valuable YC-funded companies are still private, and even for the public ones I doubt YC unloads its whole stake as soon as it can post-IPO.
Isn’t there also a large risk to YC in the event their private unicorns see substantial valuation revisions?
yea...
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#45From what I've heard from people in recent batches, this is probably a good thing for those that make it in. Pretty little personalized attention when there are 400 startups in a batch...
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.
It's been YC's thing for a while now: have startups goose their financials by selling to other portfolio companies to give the appearance of traction.
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#46Y Combinator’s Summer 2022 cohort — currently in action — boasts nearly 250 companies, down 40% from the previous cohort, which landed at 414 companies...the batch is still large “relative to the last five years of batches.” Next up, we shall hand wring about Bezos having fewer billions or some nonsense.
He'll be ok. His new sailing super yacht launches soon.
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#47The 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.
You have the luxury of patience when it's your own money. YC has been raising outside capital for several years (a decade?) now. As soon as you're investing other people's money you're at the mercy of other people's willingness to invest.
They could sell some of their holdings in these huge companies they have 7% of but basically they are saying everything is screwed right now and they expect a decade or more of depression.
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#48What downturn ? SPY is going up and up :)
The stock market is not the economy
Re: Y Combinator narrows current cohort size by 40%, citing downturn and funding
#49Earlier 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.
>and then list it on the stock market for the retail traders to hold their bags. Out of 3,840 startups funded by YC, fifteen have gone public: https://www.ycombinator.com/companies
That's 0.39%, not sure if this is typical but seems pretty low to me. Anything we can learn from this number, or it's simply just a number?