San Francisco, NFAPost: Leading US accelerator Y Combinator made it clear that it will slash its growth stage investment and cut employee strength to take on the challenges of on going slump in business.
According to a statement released on Monday, Y Combinator President & CEO Garry Tan made clear YC is known primarily as a place where very early founders create something from nothing by simply applying online and joining the world’s best founder community.
“But late stage investing turned out to be so different from early stage that we found it to be a distraction from our core mission. So we’re going to decrease the amount of late stage investing we do,” said Y Combinator President & CEO Garry Tan.
The accelerator told TechCrunch that Silicon Valley Bank’s failure was not a factor and that they have been strategizing about the shift “well before” the collapse; over 30% of Y Combinator’s startups are exposed to SVB.
“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,” states Y Combinator President & CEO Garry Tan.
Y Combinator President & CEO Garry Tan has been active online over the past four days as SVB, which once banked over half of U.S. venture-backed startups, was taken over by regulators following a historical, seemingly Twitter-induced bank run.
Garry Tan made it very clear to YC companies that “anytime you hear problems of solvency at a bank, and it can be deemed credible, you should take it seriously and prioritize the interests of your startup by not exposing yourself to more than $250,000 of exposure this year.”
Twenty-four hours after he said that, Y Combinator President & CEO Garry Tan took to Twitter to say that “this is an extinction level event for startups and will set startups and innovation back by 10 years or more. BIG TECH will not care about this. They have cash elsewhere. All little startups, tomorrow’s Google and Facebooks, will be extinguished if we don’t find a fix.”
He also penned a petition, now signed by over 5,000 tech CEOs and founders, asking congress to step in and support the entrepreneurial community.
