On the Y Combinator Summer 2022 batch
Last year I published an in-depth analysis of the Y Combinator Summer 2021 batch that was later shared by YC itself! I’ll repeat the tradition this year for the Summer 2022 (S22) batch, since we’re in an excellent position to do so at Rebel Fund after collecting over 100k data points on the 240 startups in the batch.
For the uninitiated, Rebel builds the most comprehensive database that exists of new YC startups each year to feed our proprietary Rebel Theorem machine learning algorithm, which we use to score and rank each YC company according to its likelihood of achieving a great outcome for seed-stage investors like us.
Let’s start by looking at where the S22 batch startups come from.
According to our statistics (which differ slightly from YC’s since we look at all the companies in the batch vs just those presenting at Demo Day) 62% of the companies are from the US or Canada, which is an uptick from 55% last year and reversal from the rapid internationalization we’ve observed in YC startups in recent years.
The next most common geography is Europe at 13%, about the same as last year. Asian startups were 12% of the batch vs 15% last year, but the main decrease was LATAM, which was only 6% of this batch vs 12% last year.
Breaking down the companies by subregion (i.e., country) gives a more nuanced view of where they’re from:
The was a very US-centric batch compared to other recent years, with nearly 60% of the startups American. India came in strong at 8% of the batch followed by the UK and Israel each at around 3%. YC startups are truly worldwide these days with a long tail of other countries represented.
At 240 startups, the S22 batch was dramatically smaller than other recent YC batches which have been hovering around 400 companies. It seems the downsize came disproportionately at the expense of some emerging markets.
I love to analyze YC startups by industry since watching these trends gives us great insight into where the technology world is heading. Much like our fund, YC doesn’t go into each new batch with a pre-determined investment quota by sector, but rather funds the best founders working on the best ideas regardless of industry. So, YC startup statistics are a great barometer of which technology sectors the world’s very best startup founders are gravitating towards at any given point in time.
B2B software has been a favorite for YC founders for years, and this batch is no different with nearly half the companies building B2B solutions. These founders also tend to like the YC program since it plugs them into an ecosystem full of potential early customers.
Financial technology (aka fintech) is the second-most popular sector at 20%, just as it was last year.
Though healthcare was the third-most popular sector at 11%, there were much fewer healthcare startups in this batch vs previous ones. We also noticed consumer making a slight comeback at 10%, which is more than other recent batches.
Just as with geography, we can get a more nuanced view of the companies if we break them down by subindustry. This produces a colorful chart since YC funds startups in just about every technology subindustry imaginable.
While no subindustry really dominates this chart, the most concentrated ones are infrastructure (9%), engineering, product & design (8%) and finance & accounting (7%).
It’s also worth noting the sectors that aren’t as popular as you might expect. For example, cryptocurrency/blockchain startups and climate startups are each less than 2% of the batch. There are important technology sectors for sure, but still quite early in their development despite all the media hype.
There seems to be a persistent misconception that you need a well-established, revenue-producing startup to get accepted into YC these days, but that’s not at all the case.
We found that 60% of S22 startups are less than a year old, and 90% are less than 2 years old! This aligns with YC’s own published S22 batch statistics, which reports that 71% of the batch had zero revenue before YC.
While there are some companies 3+ years old, they comprise less than 4% of the batch.
Since our algorithm and overall diligence process as a fund puts much more emphasis on a startup’s founders than any other characteristic, we collect a huge amount of data on YC founders themselves.
Let’s start with the most basic statistic — how many co-founders there are per S22 startup. Here we see YC’s long-standing bias against solo founders, with just 6% of startups falling into this category.
The most common configuration by far is 2 co-founders (64% of startups) followed by 3 co-founders (25% of startups). The remaining 5% of startups have 4+ co-founders.
Now let’s dive into who these founders are.
The first thing to know is that they’re relatively experienced, with an average of 10 years work experience before they got accepted into YC.
While the fresh-out-of-college type of founders tend to get more media hype, the reality is that work experience matters — and YC knows this. That said, YC seems to make an allowance each batch for smart young founders right out of school (typically a top engineering university) but they were only 7% of S22 batch founders.
This isn’t captured in our batch statistics, but we noticed anecdotally that YC tends to prefer founders with work experience in the specific vertical their startup is operating in. This makes sense, because the best way to deeply understand your customer’s needs is to have been that customer yourself (in the tech world we call this “dogfooding”)
Doubling down on how experienced YC founders tend to be these days, we’ve noticed more and more repeat startup founders each year.
In the S22 batch, only 12% of the founders were first-timers, and 34% have started 2 or more companies in the past (to be fair, often their YC startup itself works its way into these statistics)
At Rebel, we also look at how many years of experience each founder has as a co-founder. Here we can see that while most of them have 1 year of co-founder experience or less, a full 37% have 2+ years experience in this role.
We also look at the ultimate mark of an experienced founder — if they’ve taken a startup all the way to acquisition. Though <5% of S22 founders have earned this badge, they’re the ones to watch. We also track internally how much capital their acquired startup raised and the valuation at exit, if disclosed.
Now let’s switch gears from S22 founder work experience to educational backgrounds.
Virtually every YC founder has at least some undergraduate education, so we don’t even bother tracking whether they went to college. However where they went to school is important, since we’ve found that certain universities and degrees are indeed predictive of YC founder success.
The chart below shows how many YC founders went to universities that we’ve ranked by their tendancy to graduate successful technology founders (I explain how we got these rankings in last year’s post)
It appears that YC also knows which universities are predictive of founder succcess, because they tend to accept founders from the very same ones!
In fact, the only significant deviation YC made from our top university rankings is #14 above, IIT in India, which is perhaps explained by YC’s affinity for Indian startups.
Lastly on the education front, we found that a full 60% of S22 startups have at least one co-founder with an advanced (i.e., postgraduate) degree. The most common advanced degree type is a Masters (non-MBA), which accounts for 62% of the advanced degrees in the batch, followed by MBAs (23%) and PhD’s (13%).
While it’s not captured in the chart above, these advanced degrees tend to be in technical areas of study, as YC has long held a bias towards technical co-founders. We’ve likewise found teams with technical founders to be correlated with startup success, but that’s a topic for another blog post.
If pressed to describe a ‘typical’ YC S22 batch founder, I’d say he’s a repeat founder with 10 years of experience, with an advanced technical degree from a top university, running a young B2B startup in the US. Please take this with a huge grain of salt though, because YC startups are very diverse these days so there’s really no such thing as typical.
These charts illustrate just a few of the dozens of metrics we track at Rebel for every new YC startup to help inform our investing decisions. We believe that data is the key to identifying trends and separating signal from noise when it comes to early-stage investing, and hope you’ve found at least some of these statistics insightful. Happy hunting!