The New Y Combinator

Over the last few years, Y Combinator has gone through two major transformations at the same time: the AI revolution & Garry Tan returning to YC as President & CEO. These changes have had a huge impact on the profile of YC startups and founders, which will be the topic of this post.

Since Rebel Fund maintains the world’s largest database of YC startups, founders, and outcomes outside of YC itself, we’re often the first to notice shifts in the composition of YC batches, and are best-positioned to predict their long-term implications for investors. We collect this data mostly to train our proprietary Rebel Theorem 4.0 ML/AI model to predict YC startup success, but it’s also helpful to track and report on recent YC trends.

In this post, I’ll summarize some changes we’ve observed in YC batches recently under Garry’s leadership, and what these changes might mean for early-stage YC-focused investors like us.

Founder Trends

Since Garry took over in 2023, YC founders have gotten much younger. The average age of founders had been holding steady around ~29 years since 2015, but now it stands at ~26 years and falling.

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I think this is for two reasons: 1) Garry has generally been refocusing YC on what made it successful in the first place, and 2) whenever there is a major technology platform shift underway like AI, the balance of power between youthfulness and experience tends to shift in favor of the former.

The age cohorts of YC founders that have been growing the fastest in recent years are the youngest, and for the first time the past decade, there are more YC founders under the age of 25 years than over!

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YC founders are also nerdier. At Rebel, we use AI to divide founders into “technical” vs “non-technical” backgrounds, and the “technical” group has really taken over since 2023 — another return to YC’s historical roots.

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We also look at how “pedigreed” YC founders are in various ways, and have observed that more YC founders graduated from top universities than ever in recent years. For the first time last year, more than half of YC founders graduated from a top 20 university.

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There has been an even bigger jump in the proportion of YC founders with prior work experience at top employers (i.e., those most predictive of YC founder success). In recent years, nearly half of YC founders have worked at a top 20 employer vs only ~25% a decade ago.

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At Rebel, we use an AI model to infer the personality profile of each YC founder based on their career history and online footprint. Since Garry took the helm, average YC founder personality profiles have shifted, with much lower levels of Dominance and higher levels of Conscientiousness.

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We can also observe Garry’s bias towards community-building, with a massive leap in 2023 in the percentage of YC founders who had previously worked at a YC startup.

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Last but not least, we can see Garry’s strong conviction in the San Francisco Bay — there has been a huge increase in the proportion of YC startups located in the Bay, now approaching 85%!

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So in short, YC has become “more YC” than ever, with a refocus on young, technical, pedigreed, Silicon Valley-based founders.

Implications for YC Investors

So what do these dramatic changes in YC founders and startups mean for early-stage YC-focused investors like Rebel? According to my data science team, it’s a mixed bag. Let’s start with the implications of founder age.

When we trained our Rebel Theorem 4.0 ML/AI algorithm across millions of YC startup and founder data points, we found that characteristics related to founder age (years of work experience, years since university, etc) are some of the most powerful predictors of startup success.

We also found there is a “sweet spot” in founder age that properly balances the advantages and disadvantages of youth vs experience — 26–30 years old.

Founders younger than 26 are much more likely to have “dead” startups, and founders older than 30 are much more likely to have “zombie” startups (still alive, but haven’t achieved breakout success). The odds of founding a “success” startup, which Rebel defines as a $60M+ valuation and still operating, really peaks in the 26–30 year old cohort.

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So, with over half of new YC founders now aged 25 and younger, you’d think there may be rocky times ahead, but founder age and its derivatives are just a few of the hundreds of features that Rebel Theorem 4.0 uses to predict YC startup success.

For example, today’s younger YC founders score higher on 4 out of 6 founder-product fit metrics we track at Rebel, and these scores are also highly-predictive of successful YC startup outcomes.

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The shift towards more YC startups in the SF Bay Area is also a mixed bag, because while SF-based startups are significantly more likely to be successful than their non-SF peers, they’re also more likely to fail (Silicon Valley is “go big or go home”).

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At Rebel, we also look at hundreds of other aspects of founder pedigree, work experience, demographics, previous startups founded, founder archetypes, and many more categories I haven’t yet written about publicly.

I could further dissect the new profile of YC startups under Garry’s leadership, but the bottom line is the ‘new’ YC isn’t necessarily better or worse, just different. Only time will tell the net effect of YC’s latest selection criteria on startup outcomes, especially given how wildly different the technology world has become since the dawn of advanced AI.

One thing we know for certain is YC startups not only look different than before, but they also feel different. Founders are hungrier, there is a palpable sense of urgency, revenues are growing faster, and the stakes feel higher. In my opinion, it’s the best time ever to invest in YC startups.