Y Combinator
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Y Combinator (YC) is an American startup accelerator and early-stage venture firm headquartered in San Francisco. Founded in March 2005 by Paul Graham, Jessica Livingston, Robert Tappan Morris, and Trevor Blackwell, it pioneered the batch model of seed investing: funding large cohorts of companies on identical terms and running them through a three-month program that culminates in a Demo Day pitch to investors [1][2]. YC has funded more than 5,600 companies since 2005, including Airbnb, Stripe, Coinbase, Dropbox, Reddit, DoorDash, Instacart, and Twitch, and states that its alumni hold a combined valuation of roughly $1.3 trillion [1][2]. The firm has been led since January 2023 by president and CEO Garry Tan.
During the generative AI boom of the 2020s, Y Combinator became one of the most important institutional on-ramps into the AI startup ecosystem. Around 80 percent of its Winter 2025 batch was building AI products [3], its published "Requests for Startups" center on agents and AI-native companies [4], and its historical ties to OpenAI run through former president Sam Altman and the YC Research nonprofit [5][6].
Y Combinator admits startups in batches, now four times per year (winter, spring, summer, and fall), and invests $500,000 in each company on standard terms [1][7]. Founders relocate to San Francisco for the three-month program, work with group partners through office hours and weekly sessions, and present to an invited audience of investors at Demo Day [1]. Admission is highly competitive: for the Winter 2022 cycle, YC received about 17,000 applications and funded 414 companies, an acceptance rate under 3 percent [8].
The firm's motto, "Make something people want," reflects its emphasis on rapid product iteration and direct user feedback over business formalities. Beyond the accelerator, YC operates the technology forum Hacker News (launched 2007), the free online Startup School courses, a co-founder matching service, and the Work at a Startup hiring platform [2]. Graham's startup essays and the YC partner network give the firm an outsized cultural influence on Silicon Valley relative to its check size.
Graham, Livingston, Morris, and Blackwell launched YC in Cambridge, Massachusetts in March 2005 as the "Summer Founders Program," an experiment in funding many young founders at once with small checks. The first batch of eight companies included Reddit and Loopt, the location-sharing startup co-founded by Sam Altman [2]. For several years YC alternated between Cambridge and Mountain View, California, before consolidating in Silicon Valley in 2009; it moved its headquarters to San Francisco in 2023 [2].
Altman succeeded Graham as president in 2014 and expanded the organization's ambitions. In October 2015 YC created YC Research, a nonprofit research lab seeded with a $10 million donation from Altman; that December, YC announced that "the first group affiliated with YC Research is OpenAI" [5]. In 2015 YC also launched the Continuity fund to back its alumni at later stages [9]. Altman stepped down in March 2019 to become full-time CEO of OpenAI, and Geoff Ralston led YC as president from 2019 until January 2023, when Garry Tan, a former YC partner and co-founder of Initialized Capital, took over as president and CEO [2][6].
Batch sizes swelled through the late 2010s, peaking at 414 companies in Winter 2022, before YC cut its Summer 2022 cohort by about 40 percent, citing the venture downturn [8][10]. In March 2023 Tan wound down the Continuity fund, laid off about 20 percent of staff (17 people, mostly on the late-stage team), and refocused the firm entirely on early-stage acceleration; Continuity leaders Anu Hariharan and Ali Rowghani departed [9].
In September 2024 YC announced it would expand from two to four batches per year beginning in 2025, with each cohort roughly half the previous size, explicitly because "the rate of change caused by AI" was producing more startups worth funding quickly [7][11]. The first fall batch ran in autumn 2024 and the first spring batch (X25) in April to June 2025 [11]. In March 2025, longtime group partner and former accelerator CEO Michael Seibel moved to a partner emeritus role [12].
YC's standard deal has evolved from token-sized checks into one of the largest uniform seed packages in venture capital.
| Period | Standard investment | Terms |
|---|---|---|
| 2005 to early 2010s | About $6,000 per founder (around $20,000 per company), later supplemented by partner-funded notes | Roughly 6 to 7 percent equity [2] |
| 2014 to 2021 | $120,000 to $150,000, adjusted several times | 7 percent equity [2] |
| Since January 2022 | $500,000 total | $125,000 on a post-money SAFE for 7 percent, plus $375,000 on an uncapped SAFE with a most favored nation (MFN) clause [13] |
The MFN tranche converts at the terms of the company's next priced or capped round, so YC's effective ownership typically lands between 7 and about 10 percent. The firm invests out of funds raised from institutional limited partners and earns returns from equity appreciation rather than fees charged to founders. In February 2026, YC began allowing portfolio companies to receive up to the full $500,000 in stablecoins, a first among major accelerators [14].
Each batch is organized into groups and sections of six to ten companies, advised by group partners who are themselves former founders [1]. YC steers applicants through periodic "Requests for Startups"; the Fall 2025 edition called for AI-native companies that sell completed work rather than software, multi-agent infrastructure, video generation tools, and programs for retraining workers for an AI economy [4].
YC's most consequential connection to AI runs through OpenAI. The lab's December 2015 launch announcement listed YC Research among the funders, alongside Altman, Elon Musk, Peter Thiel, Reid Hoffman, Jessica Livingston, Amazon Web Services, and Infosys, who collectively pledged $1 billion [6]. YC's own blog described OpenAI as the first group affiliated with YC Research [5], although TechCrunch later reported that YC Research never ultimately contributed its pledged funds [15]. Altman ran YC and co-chaired OpenAI simultaneously for more than three years before leaving the accelerator in March 2019 to lead OpenAI full time [2][6]. YC continues to list OpenAI in its company directory and cites the lab, valued at roughly $500 billion in late 2025, among its top alumni [1].
AI moved from a batch theme to the batch itself in the mid-2020s. Tan told CNBC in March 2025 that about 80 percent of the Winter 2025 cohort of 160 companies was building AI products, that the batch in aggregate was growing 10 percent week over week (the fastest in YC history), and that for roughly a quarter of the companies, 95 percent of their code had been written by AI, a practice popularized as vibe coding [3][16]. "It's not just the number one or two companies, the whole batch is growing 10 percent week on week," Tan said. "That's never happened before in early-stage venture" [3]. He added that some companies were reaching as much as $10 million in revenue with teams of fewer than 10 people, and framed the moment as one of unusual commercial proof: "There's a ton of hype, but what's unique about this moment is that people are actually getting commercial validation" [3]. TechCrunch noted that many W25 startups were building tools for other companies' AI agents rather than agents themselves [16]. The pattern continued into 2026: nearly 190 companies presented at the Winter 2026 Demo Day in late March 2026, with AI infrastructure, robotics, defense, healthcare, and AI-enabled services dominating the cohort [17].
In June 2025 YC ran its first AI Startup School, a free two-day event in San Francisco for about 2,000 invited computer science students. Speakers included Altman, Elon Musk (xAI), Satya Nadella (Microsoft), Andrej Karpathy, Anthropic co-founder Jared Kaplan, Andrew Ng, Francois Chollet, and Perplexity CEO Aravind Srinivas [18].
| Company | YC batch | AI significance and outcome |
|---|---|---|
| OpenAI | Affiliated via YC Research (2015) | Developer of ChatGPT and GPT models; listed by YC at about $500B valuation [1][5] |
| Scale AI | Summer 2016 | Data labeling and evaluation; Meta paid $14.3 billion for a 49 percent stake in June 2025, valuing it above $29 billion, with founder Alexandr Wang joining Meta [19] |
| Cruise | Winter 2014 | Self-driving cars; acquired by General Motors in 2016 [2] |
| Casetext | Summer 2013 | Legal AI; its CoCounsel assistant was an early GPT-4 application; acquired by Thomson Reuters for $650 million in 2023 [20] |
| Replit | Winter 2018 | Browser-based coding platform turned AI app-building agent [1] |
| Deepgram | Winter 2016 | Speech recognition foundation models [21] |
| Starcloud | 2024 | Orbital data centers for AI; flew the first Nvidia H100 GPU in space in November 2025 and became YC's fastest unicorn, reaching a $1.1 billion valuation 17 months after Demo Day in March 2026 [22] |
Under Tan, YC has positioned itself as an advocate for "little tech," arguing that AI regulation should target harmful applications rather than model development. In 2024 YC and Andreessen Horowitz campaigned against California's SB 1047 AI safety bill, circulating a letter claiming developers could face jail for failing to anticipate misuse; the bill's author, Senator Scott Wiener, called the characterizations "inaccurate, inflammatory," and Governor Gavin Newsom ultimately vetoed the bill in September 2024 [23]. YC has also urged support for open-source AI and federal preemption of state patchworks in its public policy work.
The firm has drawn criticism as well. In October 2024 it was widely criticized for backing PearAI, a startup whose initial product was a re-licensed clone of an open-source AI coding editor; the founders apologized and changed the license [24]. Commentators have also questioned whether funding hundreds of similar AI startups per year produces herd behavior, and whether YC's brand inflates seed valuations of its graduates.
Y Combinator is generally regarded as the most successful startup accelerator in the world, and its batch-plus-Demo-Day format has been copied by hundreds of programs globally. Its directory spans more than 5,600 funded companies, including dozens of unicorns and public companies such as Airbnb (which went public above a $100 billion valuation in 2020) and Coinbase (direct listing at $86 billion in 2021) [1][2]. In the AI era its significance is less about any single investment than about throughput: with four batches a year, several hundred new companies annually, majority-AI cohorts, explicit AI-focused requests for startups, and events like AI Startup School, YC functions as a standing census of where AI application startups are headed, and its Demo Days are treated by investors as a bellwether for the sector [3][4][17][18].