Y Combinator, a popular accelerator that provides seed funding for startups, has announced that it will cut the size of its investment to 125,000 to enable it to invest in more startups around the world.
This announcement was made by Geoff Ralston the President of Y Combinator in a recent blog post.
He wrote: “We are making two changes to our standard deal in conjunction with a recent fundraise. Starting with the Winter 2021 batch, our deal will be $125,000 for 7% equity on a post-money safe, and we will reduce the amount of our pro-rata right to 4% of subsequent rounds. In the coming years, this will enable us to fund as many as 3000 more companies.”
Geoff added that the amount of investment in startups has changed since Y Combinator was founded in 2005.
“For background, YC originally gave about $20,000 for 6% of a company. In 2011, Yuri Milner and SV Angel began offering an additional $150k to every startup in YC. We continued this program with new investors and reduced the deal to about $100k for 7%.
“In 2014, we increased that amount to $120k, and in 2018 to $150k when we raised our last fund.
“We have changed our deal several times over the years as we have raised new funds, modified budgets, and to match the current environment and economy. We do not expect this to be the last time we change the deal, but we do feel this is the right place to be for the next several years”, Ralston concluded.
Nigerian startups like Paystack, Flutterwave, and many others have graduated from Y Combinator and also received investment from one of the world’s leading accelerators.