On the life and death of Y Combinator startups

🌈 Abstract

The article discusses the failure rate and success of startups that have gone through the Y Combinator incubator program. It provides data and analysis on the proportion of YC startups that are active, inactive (failed), or have exited (public/acquired) over time.

🙋 Q&A

[01] Startup Failure Rates and Timelines

1. What are the key findings about the failure rates and timelines of Y Combinator startups?

• Around 88% of YC startups have either shut down or exited by the ~12 year mark
• After the ~12 year mark, the breakdown is:
  • Around 50% of startups have failed
  • Over 35% have exited
  • The remaining 15% are still operating
• In the first couple years, failed startups ("lemons") tend to show up earlier than successful exits
• After a couple years of survival, a YC startup is nearly as likely to end up exited as failed in any given year

[02] Implications for Investors and Founders

1. What advice does the article provide for early-stage venture investors? The article states that for early-stage investors, the focus should be more on the magnitude of successes rather than the number of failures, as the upside potential is virtually unbounded while the downside is limited.

2. What advice does the article provide for YC founders? The article advises YC founders to ignore the success or failure rates of their peers, and instead focus on whether they themselves succeed or not.