Y Combinator Advises Founders To ‘Plan For the Worst’ Amid Market Teardown

Y Combinator, a Silicon Valley kingmaker, is advising its portfolio founders to “plan for the worst” as startups across the globe scramble to navigate a sharp reversal after a 13-year bull run. From a report: The investment firm — whose early backings include investments in Dropbox, Coinbase, Airbnb and Reddit — this week suggested startups to cut their expenses and focus on extending their runways within the next 30 days. Those who don’t have the runway to “reach default alive,” the firm said in the letter, titled “Economic Downturn,” YC is strongly suggesting that they consider raising money.

“If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn. Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan,” it said. The note from YC, which backs hundreds of young startups a year, is a signal that the market teardown that has significantly slashed the value of a large number of tech companies including giants such as Shopify and Netflix in recent weeks is trickling down to the early-stage startups universe.