Y Combinator Fires 20% Workforce As It Scales Back Late-Stage Investments

US-based early stage startup accelerator Y Combinator on Tuesday (March 14) laid off 17 employees, or around 20% of its workforce, citing its decision to scale back late-stage investments.

In a blog post, the startup accelerator’s CEO Garry Tan said that late-stage investing became a “distraction from core values” for Y Combinator, hence the decision to scale back these investments.

“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,” Tan added in the statement.

The Y Combinator CEO added, “There shouldn’t be any noticeable effect on the companies we’ve funded or on the way we interact with alumni, but if any companies or alumni have questions, I’m here and the YC group partners are here – as always, to help you make something people want.”

In a separate statement, given to TechCrunch, Y Combinator said that the development was not a consequence of the collapse of Silicon Valley Bank (SVB) last week. The accelerator said it had been working on the shift before the collapse. 

It must be noted that more than 30% of Y Combinator’s startups are exposed to SVB, which translates to thousands of startups.

Earlier, Tan called the SVB collapse an ‘extinction-level event’, and asked US regulators to save the startup ecosystem. 

During early signs of trouble at SVB, Tan also told YC startups that they needed to prioritise their interests and not have an exposure of over $250K in a bank this year if they heard credible news about solvency problems at that bank.

Tan also wrote a petition to the US Congress, now signed by more than 5,000 tech CEOs and founders, to step in and support the startup ecosystem in the country.

The US regulators did step in, with the Federal Deposit Insurance Corporation (FDIC) stating that all depositors would be protected and would have access to their funds starting Monday (March 13).

Y Combinator has backed some of India’s biggest tech startups, including the likes of Meesho, Razorpay, Zepto, Groww, Khatabook, Cashfree Payments, FamPay and Karbon Card. The company’s biannual cohorts regularly feature multiple Indian startups, with the last cohort having 19 Indian startups.

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