Tech firms seeking late-stage funding would have to take Y Combinator off their list as the startup accelerator said it will pull back from late-stage investing, just days after the fall of Silicon Valley Bank (SVB).
Y Combinator President and CEO Garry Tan announced in a blog post that the startup accelerator will decrease the amount of late-stage investing that it does.
The company is known for early-stage investing but has also done some late-stage investing in recent years.
“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,” Tan said.
He, however, told TechCrunch in an interview that the decision to pull back from late-stage investing has nothing to do with the collapse of SVB.
About 30% of Y Combinator’s companies are exposed to SVB and Tan, in a separate Twitter post, said these startups “can’t make payroll in the next 30 days”.
As part of the restructuring, 17 employees on the late-stage investing teams had their roles eliminated, Tan wrote in the post. The affected employees account for about 20% of the firm’s total staff.
He, however, noted that the restructuring will not have “any noticeable effect on the companies we’ve funded or on the way we interact with alumni”.
According to a report by The Information, the partners who led the late-stage fund, Anu Hariharan and Ali Rowghani, are planning to leave the accelerator, reportedly to set up a fund of their own.
Tan was appointed Y Combinator’s president and CEO at the beginning of this year following the exit of previous president Geoff Ralston. He previously worked at venture firm Initialized Capital and served as a Y Combinator partner from 2010 to 2015.
Y Combinator, founded in 2005 by Paul Graham, Robert Morris, Trevor Blackwell, and Jessica Livingston, is one of the most prestigious and well-known startup accelerators in the world. Many of its alumni went on to become successful startups, including Dropbox, Airbnb, Reddit, and Stripe.
Most recently, Y Combinator anchored the seed funding round in Singapore-based edtech startup Strive, which provides coding programmes for children.