Excavating the latest accelerator with an asterisk
Like a startup Even the ecosystem, accelerators change over time. TechStars has expanded to a network of programs to choose an example. Y Combinator, perhaps the best-known startup accelerator, has also evolved. It now offers more capital than ever to select companies and is in the process of learning how its program will work in a post-Covid world.
Like most of the venture capital landscape, Y Combinator has been a little underwhelming this year. The current cohort of startups in the US program is 40% thinner, with only 240 companies compared to the previous batch’s 400.
That change made us curious about the second-order effects of allowing fewer companies into the program: What does a smaller batch do to the geographic makeup of companies in an accelerator?
Before we get into the data, a caveat about remote work: For the accelerator, one-third (35%) of the startups in its current program are remote, and even more (37%) call them “remote-friendly.” Remote work and partially remote teams are the company’s Where “based” dilutes the importance.
This is not a new trend. Covid has led to the birth of many startups in the remote-first world, meaning hiring has often been distributed over the past few years. If your team is spread across countries and time zones, being based in the United States is never a bad idea. However, understanding where a company resides can tell us where companies base themselves to best gather talent, capital and exit opportunities.
There is only one Colombian startup in the current batch, which takes things back to pre-Covid levels.
Let’s take a look at where Y Combinator’s most promising young tech companies come from to get a loose barometer of where it’s finding the wittiest founders behind the accelerator.
Given its small size, it is not surprising that this year’s Y Combinator group represents fewer countries. According to the investment group, the Summer 2022 class includes startups from 34 countries, down from 42 countries in the Winter 2022 cohort.
Notably, that drop is a little less than 20%, which is half of the 40% drop in the total number of startups accepted into the program as we noted above. Geographical diversity in terms of countries represented did not decrease linearly with reduction in batch size.
Its diversity may not have shrunk as much as some might expect, but the group is still more concentrated in the United States than before. According to the company, 58% of its current batch is based in the United States, up from 50% of the Winter 2022 cohort.