YC Reduces Summer 2022 Cohort Size by 40% Due to Economic Downturn

YC Reduces Summer 2022 Cohort Size by 40% Due to Economic Downturn

Y Combinator, an American-based global technology startup accelerator has reduced the number of startups within its accelerator for the summer 2022 batch from 414 in its previous cohort to 250, which represents a 40% reduction.

According to The Information, this was due to the current economic downturn and the recent slow in venture capital funding. You will recall in May 2022, that YC in a mail advised its portfolio companies to prepare for the worst in this economic downturn.

“You can often pick up significant market share in an economic downturn by just staying alive.”  Other notable quotes in the 10 bullet points memo include  “no one can predict how bad the economy will get, but things don’t look good,” the world’s leading accelerator advised.

Lindsay Amos, Y Combinator’s head of communications, confirmed in an independent verification by Techcrunch via text message, saying, “The S22 batch is significantly smaller than our most recent batches.” Amos says, due to the economic downturn and changes in the venture funding environment, the tech startup accelerator deliberately reduced the number of companies funded between W22 and S22.

“Because we are constantly evaluating every aspect of our batches as well as the environment in which the companies will be operating, the batch size has always varied from season to season and year to year,” Amos added.

The Plight of African Tech Startups

This might not be the best news for African startups that have benefited greatly from the program that has given the continent two unicorns in these recent years. Nigeria had 18 startups in the W22 class, making it the third most represented country in the class.

Nonetheless, the reduction in class size may be a blessing in disguise, as it will reduce competition among graduates for funding.

5 African startups have been accepted into the summer 2022 (YC S22) batch of Y Combinator. Pivo Technology and Chowdeck are two Nigerian startups among the five.

In January, the technology startup accelerator announced an increase in its standard deal for accelerator companies. It is now offering a total investment of $500,000. It will continue to invest $125,000 for a 7% return while also investing an additional $375,000 in an uncapped safe with a Most Favored Nation” (MFN).

Y Combinator will hold its 35th Demo Day virtually on September 7th and 8th, 2022. The two-day event will feature founders from 30 countries and startups from every industry, including open source, machine learning/artificial intelligence (ML/AI), development tools, fintech, B2B SaaS, consumer, healthcare, and hard tech.