The latest cohort from Y Combinator has more than 200 startups. More than a record half of S23 startups focus on AI applications, highlighting a dominant trend we can expect in the coming years. S23 is unique for at least one other reason: only one company in the batch hails from India/Southeast Asia, according to YC’s official directory.
Declining participation of Indian and Southeast Asian startups in Y Combinator is slowly becoming a trend. Previous batches showed a higher presence with 10 startups in the previous batch, 20 in S22, 37 in W22, 33 in S21, and a peak of 44 in W21. (Some Indian startups are registered in the US and may not always be identified as distinctly Indian, which adds a layer of complexity to the analysis.)
In a statement to TechCrunch, a spokesperson for YC said that the reduction is to return to the personal events of the storied venture accelerator firm that requires the founders to move to the US for a quarter of a year.
And for a growing number of international startups, that’s becoming a challenge.
“We found that there is no substitute for personal interaction with other founders and investors during three months at YC. One effect of that though is that we see international founders struggling to participate because of their inability to get visas,” the spokesperson said.
The US government has stepped up visa checks in recent years, especially for countries with long visa overstays, due to national security and illegal immigration concerns. Visa slots for Indian citizens have also been reduced.
“The founders of GigaML, for example, are world-class researchers who trained Llama2 to defeat Anthropic Claude 2. But the founders had to work in Zoom because their visas were denied twice by US Immigration. Builders want to come to the US but can’t. We need a policy change,” the YC spokesperson added.
Many founders and investors in India agree with YC’s assessment, but at some point the US giant still needs a broader focus on the region or else it risks losing its appeal. (The investors and founders spoke on condition of anonymity to avoid upsetting their peers.)
The rival seed-focused program from Peak XV is also increasingly committed to local entrepreneurs, offering more favorable terms and resources tailored to the local context.
A high-ranking executive of one of the high-profile VC firms further emphasized that YC’s drive for Indian startups to register in the US has become a liability for many of these entities.
The recent situation involving Silicon Valley Bank has affected Indian companies that are registered in the US and rely on the now controversial bank for their finances. Moreover, as many experienced Indian startups are realigning their operations back to India, they are facing significant tax implications, which is not good.
Additionally, as TechCrunch previously pointed out, India currently has a limited depth of AI startups, which could also play a role in the decline.
