Y Combinator said the market downturn was the reason for a smaller summer batch compared to recent cohorts. But does the exclusivity come at the cost of the ecosystem’s most diverse talent?
These entrepreneurs are young, hungry and represent more than 30 countries, including Italy, Israel and Indonesia. The 240-company cohort is noticeably smaller than the Winter ’22 group, which had 402 companies present from more than 40 different countries.
TechCrunch looked at the 227 companies that publicly disclosed information out of 240 total companies from this batch to identify diversity trends.
Data shows that about 15% of companies have a woman founder, a slight dip from the last cohort’s 17.9%. According to the metrics on the YC website, around 7% of this cohort’s companies have a Black founder, followed by 12% for those with a Latinx entrepreneur. Those numbers are slightly below the last cohort’s metrics, which contained 8% Black-founded companies and 13% Latinx-founded startups.
Using the website data to break this down even further, four companies in this latest batch are founded by Black women, which is the exact same number as last year. However, the smaller set size means the concentration of Black women in the accelerator increased from 0.99% to 1.72%.
Six companies were founded by Latinas, a dip from nine in the last group. Similarly, the smaller set size means the concentration of Latinas in this accelerator increased from 2.24% to 2.6%. Only two Latinas in this latest group are from Latin America — also the same metric last time — as most either hail from the U.S. or represent geographically remote locations.
Meanwhile, male-identifying entrepreneurs consisted of 90% of all founders in YC’s last batch — this round, their representation fell slightly; they now make up around 85%.
The number of Black women in these batches has always been consistently low, but W’21 and S’21 were record years for Latina-founded companies, with 14 and 12 companies representing this group out of 331 and 390 businesses, respectively. Indigenous founders made up 0.25% of the W’22 batch, although there is no data yet that shows that metric for S’22.
While the website shows how many companies have diverse founders, YC provided information to TechCrunch to show the total concentration of founders within the entire batch. In total, only 3% of founders in this class identify as Black and 6% identify as Hispanic or Latino, compared to 6% and 12% the batch prior. While it may appear that these groups were halved in just a matter of months, YC introduced a new demographic that could account for some of the drops.
YC now allows founders to identify as multiracial, a choice that 8% of the batch founders made. While it’s unclear exactly how “multiracial” is broken down, beyond the fact that it counts anyone who identifies with multiple ethnicities, the accelerator acknowledged that the new category makes it difficult to track diversity progress batch over batch; in this case, it’s possible, given that some Black and Latinx founders may identify as multiracial, that the new category contributed to a drop in monoracial demographic categories.
For example, a founder who identifies as both Black and white could be counted as multiracial rather than just Black, contributing to the mixed-race category metrics rather than the numbers compiled for Black founders.
YC said that “this addition was long overdue” and was done so that YC founders could more accurately describe themselves.
The option to identify as multiracial allows for the diversity and fluidity of different identities in the world, beyond pre-chosen categories that put people into either-or boxes with little room for movement.
In an email to TechCrunch, managing partner Michael Seibel said that, since first tracking diversity numbers in 2015, YC has funded over 800 women, more than 350 Black founders and over 675 Latinx founders.
“I am not aware of any other investor who has funded more underrepresented founders during the same period of time, and as an underrepresented YC founder myself, one of my goals is to make sure that YC is accessible to all founders, regardless of their background,” he wrote.
Seibel went on to share specific ways that YC — which had a 1.3% acceptance rate this batch — is trying to level the playing field. He said that over 40% of the companies in the Summer 2022 batch got into YC with only an idea, with many folks still working jobs when accepted. “These founders did not have to risk quitting their jobs before joining the program,” he said.
Additionally, 64% of the batch raised no other investment before being accepted to YC. Seibel added that the accelerator is happy to be the first money in and does not require signaling from other investors before writing a check. Notably, 36% of the batch raised money before going through Y Combinator. YC says that no warm introductions are required to participate in the accelerator and invites applicants to apply directly on the website. That said, there’s certainly a benefit in being consistent: 50% of the batch applied more than once.
Seibel shared that one goal of YC’s recently announced expansion of its standard deal, which now offers $500,000 to all batch participants, is to convince founders who do not come from wealthy families to participate in the accelerator.
“By participating in YC, they would have enough money to both operate their company and pay themselves enough to replace a significant portion of their previous wages,” he added.
“One of the biggest pieces of feedback we hear from YC founders from underrepresented backgrounds is that choosing to do a startup often requires them to sacrifice economically. This not only impacts them but often their extended family.”
Notably, YC says about 30% of founders moved to the Bay Area during the batch, and about 23% were already in the Bay Area. While the accelerator remains remote-friendly, the bifurcation between those who were in-person and those who were remote could play a role in the diversity of founders.
The accelerator, alongside the entire industry, still has a long way to go.
This is the last batch that will see Geoff Ralston as president of Y Combinator. Garry Tan, the new CEO and president of YC, told TechCrunch last week that he wanted to continue making strides toward diversifying YC, noting that his firm, Initialized, is one of the most diverse in venture. While it remains likely that Tan’s perspective won’t immediately play a role in W23, which is already taking applications and sending out acceptances, hopefully, his statement ages well.
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