Decline in YC funding to SEA firms ‘not intentional’: CEO Garry Tan

Just 10 months at the helm of US-based Y Combinator (YC), Garry Tan has his work cut out for him.

Garry Tan, Y Combinator’s CEO and president / Photo credit: Tech in Asia

Tan is no stranger to the storied VC firm. When he was a partner at YC from 2011 to 2015, he launched and co-founded early-stage venture firm Initialized Capital.

He rejoined YC in January as president and CEO. Tan was quick to implement changes at the firm, such as shuttering a fund focused on investing in late-stage startups. This decision resulted in layoffs that affected 17 employees and sparked an uproar among graduates of the program.

“The year started with 100 people working at YC. We’re 76 now, and that was hard,” Tan said during a fireside chat at a Tech in Asia Founders Meetup on November 2.

The CEO added that being on top has catapulted him further into the spotlight and dialed up public scrutiny to “another level.”

It also became “hard to focus and say no,” Tan observed. “That’s certainly the thing that I’m struggling with the most.”

Here are the biggest takeaways from Tan’s fireside chat.

1. “We continue to fund companies in Southeast Asia”

While it’s true that YC has backed fewer startups in Southeast Asia and India in the past two years, that was “not intentional,” Tan said.

“The most surprising thing that I’ve been hearing the past couple of days is, people are worrying that YC isn’t going to fund companies in Southeast Asia anymore. So let me just officially say: yes, we continue to fund companies in Southeast Asia,” he stressed.

YC’s startup directory indicates that for its Winter 2023 batch, the firm funded just two Southeast Asian companies out of 218 globally.

The startups were Proglix, an Indonesian B2B marketplace where small and medium-sized manufacturers can purchase electrical supplies and raw materials like steel, and Defog.ai, a Singapore-based firm focused on data analysis for enterprises.

That said, the lines between how startups are categorized and where its founders are based are blurring as companies become increasingly global.

A spokesperson for YC explains that the public directory shows launched portfolio companies and their locations according to where founders say they’re based. In its Summer 2023 batch, for instance, founders were asked to move to San Francisco for the three-month program, after which they were encouraged to go “wherever makes the most sense” for their startups.

2. Advice for AI “wrapper” firms: specialize

3. Consumer tech is not dead

4. Hard times for lending businesses

5. YC mobile app in the works