- Y Combinator Announces It’s Abandoning Late-Stage Investing to Focus on Early-Stage Investing
- As a result, 17 employees who worked on end-stage investments will be laid off
- The Silicon Valley accelerator assures that this decision was not made because of the fall of the SVB bank
While the tech world is still shaken by the fall of SVB bank, Y Combinator, the Silicon Valley accelerator, announces the layoff of 17 employees. This would represent nearly 20% of its workforce, according to the TechCrunch site. A decision which is the direct consequence of a reduction in the activities of the startup accelerator.
In essence, Y Combinator is ditching late-stage investments, in order to focus on the early-stage investments it is known for. “Late-stage investing turned out to be so different from early-stage investing that we found it to be a distraction from our core mission. We will therefore reduce the amount of last-minute investments we make”writes the CEO, Garry Tan, in a post.
Y Combinator is going to lay off some of the employees working in the team that was working on end-stage investments. For companies that have been financed by YC, Tan assures that this decision will have no particular effect. Obviously, one could think that this change of strategy, of one of the emblematic players of American tech, is a consequence of the fall of Silicon Valley Bank. After all, 30% of its startups have exposure to this bank.
A decision that would not be linked to SVB
But the accelerator told our colleagues at TechCrunch that the fall of SVB was not among the factors that led to this decision. And this would have been studied long before the recent events. In any case, as noted by the American media, Garry Tan reacted a lot on Twitter, compared to recent events.
On March 12, Y Combinator also shared a petition asking Washington to “save innovation in the US economy.” A petition that has been signed by 5,000 CEOs of companies with more than 400,000 employees.
Thousands of startups and small businesses are at risk due to the SVB failure. We ask for depositors to be made whole, and for regulation to prevent this catastrophe.
650 founders who employ more than 22,000 people, have already signed. https://t.co/pfuObWnhts…
— Garry Tan 陈嘉兴 (@garrytan) March 11, 2023
Later, Garry Tan validated the Federal Reserve’s decision. “It is the right decision to preserve the banking system: depositors will be compensated”he wrote.
This is the right move to preserve the banking system: Depositors will be made whole
— Garry Tan 陈嘉兴 (@garrytan) March 12, 2023
However, in its petition, Y Combinator also calls for more regulation. “In the longer term, Congress should work to reinstate stricter regulatory oversight and capital requirements for regional banks (…)”can we read in the document.
