Y Combinator's Bold Move to Four Annual Cohorts: A Startup Gamble?

Y Combinator (YC) has long been the gold standard for startup accelerators, having launched unicorns like Airbnb, Dropbox, and Stripe.

So when Garry Tan, YC’s current president, announced a plan to double the number of cohorts per year from two to four, it understandably made waves across Silicon Valley.

But while the move promises to shake up the startup landscape, it raises important questions about the future of YC and its place in the increasingly crowded accelerator ecosystem.

The Benefits: A Boost in Responsiveness and Focus

Tan’s vision to increase the number of cohorts while halving their size is not without merit.

By cutting batch sizes to around 100 startups, YC hopes to give each founder more focused attention and guidance. This shift tackles a well-documented criticism—that YC’s increasingly massive cohorts were losing the intimate, hands-on mentorship that originally set the program apart.

With fewer startups in each cohort, founders are likely to benefit from more face time with mentors, advisors, and, crucially, investors.

Another significant advantage is the timing.

With more frequent cohorts, YC can be more agile in responding to founders’ needs. Rather than waiting months for the next batch to start, founders can now join the program when they're ready, meaning YC can capture talent in real-time.

This immediacy is critical in an age when many founders are looking for ways to accelerate quickly and can’t afford to wait for months to get started.

A Saturation Point? The Double-Edged Nature of More Demo Days

On the surface, doubling the number of cohorts also means more opportunities for founders to pitch to investors via the famed Demo Day.

However, this expansion might also come at the expense of the prestige that has long defined YC. More Demo Days, each with fewer startups, could dilute the significance of the event, eroding its appeal to top investors.

The risk here is that Demo Days become less about discovering the next big thing and more like just another routine pitch fest.

Investors, who already have to sift through countless pitches, might find it harder to muster the same enthusiasm when Demo Days happen with clockwork regularity.

Additionally, with fewer startups at each event, founders might face tougher competition for attention, as investors could become more selective about which Demo Days they attend.

The scarcity factor that has always driven demand for YC graduates could wane, and with it, some of the accelerator’s allure.

Looming Exclusivity Concerns

Tan’s decision to shrink cohort sizes is clearly a reaction to the growing perception that YC was becoming too inclusive, almost to a fault.

Cohorts swelled to as large as 400 startups in 2021 and 2022, leading to concerns that the program was trading quality for quantity. By reverting to smaller batch sizes, Tan aims to restore some of the exclusivity that made YC such an attractive prospect for founders and investors alike.

Yet, despite the smaller cohorts, YC will still be pumping out around 500 startups annually—an eye-watering figure when compared to the early days when a handful of founders, like Stripe’s Patrick and John Collison, stood out from a group of just 26.

This volume could still dilute the quality of startups that make it into the program, even if individual cohort sizes are smaller.

What This Means for the Startup Ecosystem

YC’s decision to move to four cohorts a year is a bold one, and it will have ripple effects across the entire startup ecosystem.

Other accelerators may follow suit, introducing more frequent batches to keep up. However, not every accelerator has the clout of YC, and this move could further widen the gap between YC and its competitors.

It could also force founders to think more strategically about when and how to apply to YC, as each cohort will have its own rhythm and potentially its own quirks.

While this change may make YC more founder-friendly and nimble, there’s also the risk that it will weaken the mystique and high standards that have long been its cornerstone.

The move to four cohorts could bring more startups into the fold, but only time will tell if it continues to churn out the same calibre of game-changing companies that YC is known for.

In the end, YC’s expansion represents a step into uncharted territory.

While Tan’s intentions are clear—make the program more responsive and impactful—the execution will need to be carefully managed to avoid losing the unique spark that has made YC such a powerhouse in the startup world.