There are questions about the role of Y Combinator in the correction of the launch – TechCrunch

The cold is there entered the global startup marketthough not evenly. Total venture capital is declining in most regions, and falling stock prices of large and small technology companies spoiled moods on the future value of startups that are fast growing and often want money.

The end of the long boom of startups, which was first formed after the financial crisis of 2008 and largely lasted until the last months of 2021, has changed, changing market views on certain organizations.

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In every business cycle there are winners and losers, heroes and villains. Some previous winners were losers. Tiger, a megacrossover fund, has evolved from a market-dominant agent of change in technology finance to the bag holder. Various SoftBank efforts on Vision Fund funds are suffering. And some crypto-investments that looked like significant gains sprayed.

Torben FreeCEO Winged (YC W22), TechCrunch said earlier this year that many of the founders he spoke to decided to postpone fundraising in the current climate, adding that other founders “from across the ecosystem” say that “if you have to raise money properly now” , basically, you should cut everything you planned to collect in January in half».

The list of winners and losers is not so difficult to make. But with the ledger of heroes and villains is somewhat more difficult. But when the startup market has changed so quickly, so quickly, a whip emerges among the investment class. And some are pointing fingers not only at late-stage capital pools that infuse too much liquidity into the startup market – some startup players are annoyed at accelerators, particularly Y Combinator. Let’s talk about it.

The return of fear

Recent reports from venture players are again letters of recession. The last time we saw a round of these notes was when COVID-19 first hit the world outside of China, leading to economic disasters and blockades. Investors have warned startups about pinning to tough times. But, as we now know, bad times have not come for most of them.

Instead, ironically, the pandemic became a kind of accelerator, pushing more business toward technology companies that helped other concerns operate remotely; Accelerating digital transformation has become another crosswind that has supported the technology sector, giving startups a chance.

The latest round of warnings from venture capitalists is more common than we saw in 2020. Natasha Mascarenhas note that on the weekend “Everyone is developing their own note for the Black Swan startup.” Among the various firms that sent advice to their portfolios was Y Combinator.

The Y Combinator, or YC for short, is the world’s most famous accelerator. Her increasing cohort size, cadence twice a year and “standard deal” made her a startup program that identifies trends; one that has sufficient power to influence the overall direction of the market at an early stage of funding for upstarts. And, after early life sentence “about $ 20,000 for 6% of the company,” YC said raised his terms in 2020 to “$ 125,000 for a 7% stake in SAFE after the payment of money” along with a reduction in proportional rights “to 4% of subsequent rounds”.

That changed again in early 2022 when YC added a $ 375,000 bill to his deal, is offered on an unlimited basis, but with the most favored nation status. In essence, YC retained its ability to raise 7% of startup capital ahead of schedule, with additional capital provided to its portfolio companies for operations.

Over the past few years, YC has raised the bar rating of its startups from approximately $ 333,333 (6% of the company for $ 20,000) to $ 1.79 million (7% of the company for $ 125,000). What’s more, the additional capital it now offers on an unlimited basis is likely to have worked to solidify early-stage expectations that their accelerator assessment was valid in the market.

Bypassing Konduraan investor in a venture capital-oriented Midwest M25told TechCrunch that her firm “was skeptical of several practices of evaluating national accelerators in terms of investment until the last few years,” adding that changes in early-stage valuations from some accelerators – she did not name any program by name – were “even harder to consider.” these companies are for investment to such an extent [M25] stopped looking at them. “

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