Startups emerging from Y Combinator’s latest accelerator batch are opting for smaller seed rounds and seeking lower dilution, according to venture capitalists and investors. Traditionally, seed investors have preferred a minimum equity ownership of 10%, but YC startups are aiming for just 10% ownership in their fundraising rounds. This trend reflects the startups’ desire to maintain higher valuations on smaller stakes while still benefiting from the prestige of being a YC-backed company. However, some VCs have become less interested in YC companies due to inflated valuations and the perception that YC is no longer as selective as it once was. This shift in funding dynamics could pose challenges for startups seeking larger rounds in the future or in need of additional capital between seed and Series A rounds. Nonetheless, YC president Garry Tan believes that a startup’s success ultimately depends on its ability to create something people want, rather than the brand of its investors.
