Y Combinator lays off 17 people, to decrease late-stage investing

Y Combinator (YC) will scale down its late-stage investments, the early-stage investor said in a blog post on Tuesday. “In recent years, we have also done some late-stage investing. But late-stage investing turned out to be so different from early stage investing that we found it to be a distraction from our core mission. So, we’re going to decrease the amount of late stage investing we do.”

Moreover, the company has also decided to let go of 17 people who were part of the late-stage investing team.

These developments have come against the backdrop of the Silicon Valley Bank (SVB) crisis which started to unravel last week.

A large number of YC Indian portfolio firms have some level of exposure at SVB which was also the default banking partner for many Delaware-incorporated tech businesses, Business Today reported earlier.

“One or two out of 10 YC-backed companies would have more than $1 million parked with SVB. As per the interactions on YC India founder groups, there are very few who say they have zero dollars parked in SVB. The majority of people had at least $150,000 if not more in their SVB account,” a YC portfolio founder told BT.

As per YC founders, the investor strongly prefers companies to domicile in Delaware, though a few choose Singapore for incorporation. Another founder said many YC start-ups keep the bulk of the funds they raise from investors in their treasury accounts with SVB, making them particularly vulnerable to the bank’s troubles.

YC has backed more than 200 start-ups from India.

While SVB’s troubles are far from over, US regulators (including Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC)) brought some cheer to start-ups after they announced that depositors of the troubled SVB will have “access to all of their money” starting March 13.

The Federal Reserve also mentioned that it will provide “additional funding” to eligible depository institutions to help them meet the needs of the depositors. BusinessToday