Y Combinator, a renowned startup accelerator, has announced a scaleback in late-stage investments, resulting in the layoffs of 20% of its staff.
According to Y Combinator, this decision was made as late-stage investing was becoming a distraction from its core mission, which is to focus on early-stage investing. It's worth noting that the accelerator has clarified that the layoffs were not related to the recent Silicon Valley Bank (SVB) failure, despite over 30% of Y Combinator’s startups being exposed to SVB.
However, YC CEO Garry Tan had cautioned YC companies to be mindful of the banking crisis, advising them to not expose themselves to more than $250,000 of exposure this year. This news comes at a time when the tech industry is experiencing a reckoning, with many startups feeling the heat of the SVB crisis.
Tan himself has been vocal about the issue and recently penned a petition calling on Congress to support the entrepreneurial community. It remains to be seen how Y Combinator will navigate the tough road ahead, especially with its biannual Demo Day coming up in a few short weeks.