Y Combinator announces major shift in investment focus, lays off 17 team members

San Francisco-based startup accelerator, Y Combinator, has announced a major shift in its investment strategy that will see it reduce its late-stage investments. The company will now focus on supporting newer startups instead.

In a statement released on Monday, Y Combinator CEO Garry Tan said that the change was necessary to stay true to the company’s core mission. The move has resulted in the layoff of 17 members of the accelerator’s late-stage investing team, roughly 20% of its workforce.

While Y Combinator has denied that Silicon Valley Bank’s (SVB) recent collapse played a role in its decision, over 30% of the company’s startups are exposed to SVB. Tan had earlier advised Y Combinator companies to be cautious about banking with SVB, following its takeover by regulators, which led to a bank run.

Despite the layoffs, Tan has stated that the shift in focus will not have any significant impact on the startups that have already received funding from Y Combinator. The company will continue to support its alumni and help them achieve success.

Y Combinator’s decision to shift its focus away from late-stage investing is in line with a growing trend among venture capital firms to focus on earlier-stage companies. The company’s decision to lay off employees is also reflective of a broader trend in the tech industry, which has seen many companies reducing their workforce in response to the economic impact of the COVID-19 pandemic.

Y Combinator has been an active player in Southeast Asia, having recently welcomed 33 companies from the region into its winter 2022 cohort. The accelerator’s biannual Demo Day is also just a few weeks away, and it will be interesting to see how Y Combinator’s shift in focus will affect its upcoming investment decisions.