YCombinator (YC), the renowned global startup accelerator, is scaling back on its late-stage investments, resulting in the loss of 17 team members or roughly 20% of the accelerator’s workforce. The move is not related to Silicon Valley Bank’s recent collapse, according to a statement released on Monday by CEO Garry Tan.
Tan explained that the accelerator had been strategizing the shift “well before” the collapse, adding that over 30% of Y Combinator’s startups are exposed to SVB.
In a memo, Tan stated that late-stage investing is a “distraction from our core mission” of early-stage investing. He also emphasized that the shift will have no noticeable effect on the companies YC has funded or the way it interacts with alumni.
Tan has been vocal on social media in the wake of SVB’s collapse. He advised YC companies to be cautious of banks facing solvency problems and avoid exposing themselves to more than $250,000 of exposure this year.
Later, he took to Twitter to say that the banking crisis was an "extinction-level event for startups" and wrote a petition calling on Congress to support the entrepreneurial community.
Although YC denies any link between its recent layoffs and the banking crisis, it’s hard not to view the news in the context of a broader reckoning for the tech industry. YC will have to navigate this difficult road ahead as it gears up for its biannual Demo Day in a few short weeks.