Even the best-known start-up accelerator in the world cannot escape the current slump in the tech ecosystem. Y Combinator, a structure which has notably contributed to the take-off of nuggets such as Airbnb, Stripe, Dropbox or even Reddit, will reduce the sails. The company announced the cut of 17 positions within its team dedicated to late-stage investment, or about 20% of its total workforce.
Historically positioned on supporting start-ups in their seed phase, Y Combinator has attempted to break into the investment segment at a more advanced stage, but this has not proved conclusive, according to the ‘accelerator. “Y Combinator is rightly known for its early-stage investing. Over the past few years, we’ve also done late-stage investing. But late-stage investing has proven to be so different from early-stage investing. seed that we’ve found to be a distraction from our core mission, so we’re going to reduce the amount of late-stage investment we make.”explained Garry Tan, the boss of the accelerator, in a press release.
The fall of SVB, an event “that will set start-ups and innovation back ten years or more”
If Y Combinator justifies this cut in its workforce by its failed shift towards late-stage investment, it is however difficult not to see a link with the collapse of Silicon Valley Bank (SVB). Indeed, more than 30% of startups in the accelerator are exposed to the California bank, according to TechCrunch.
On March 10, the day the banking establishment was closed by the American authorities, Garry Tan warned on Twitter of the consequences of this event for the future of the ecosystem. “This is an extinction risk event for start-ups, which will set start-ups and innovation back a decade or more. BigTech won’t care. They have to money elsewhere. All the small start-ups, the Googles and Facebooks of tomorrow, will die out if we don’t find a solution”had he writing. He also launched a petition to ask the US Congress to intervene to stop the bleeding and support the entrepreneurial community. Faced with the danger hanging over the tech ecosystem, the Fed has pledged to guarantee all deposits from SVB customers, even those exceeding the $250,000 limit.