Y Combinator narrows current cohort size by 40%, citing downturn and funding

Re:Y Combinator narrows current cohort size by 40%, citing d... by q-big on Wednesday August 03, 2022 @04:51AM (#32329238)

> at some point in their process they borrow money

I would be somewhat careful with such claims.

As an investor who has money available, you have two options (in this example) where none involve borrowing money:

a) invest in some startups

b) lend this money to other entities

Increased market interest rates mean that b) becomes more attractive. In other words: the startups that you invest in for a) have to be much more promising than in a market environment with lower interest rates. This means less investing in startups.

[ Parent | on HN ]

Re:Y Combinator narrows current cohort size by 40%, citing d... by yunohn on Wednesday August 03, 2022 @06:55AM (#32330041)

Sure, but we’re talking about a VC fund. I’m not convinced that YC reduces investing in startups to pivot and profit from increased lending rates.

[ Parent | on HN ]

Re:Y Combinator narrows current cohort size by 40%, citing d... by q-big on Wednesday August 03, 2022 @07:07AM (#32330124)

A VC fund will only get money if the risk-adjusted rate of return is greater than the rate of interest; otherwise backers of the VC fund invest their money elsewhere.

This means that VC have to become more selective with respect to the startups that they invest in, as I described.

[ Parent | on HN ]

Re:Y Combinator narrows current cohort size by 40%, citing d... by Spooky23 on Wednesday August 03, 2022 @09:04AM (#32331159)

YC is qualifying and preparing startups for VC. If the funnel is narrowing at the end, it doesn’t make sense to put more companies into it.

[ Parent | on HN ]