Y Combinator, traditionally one of the most active accelerators in India, funded only four Indian startups in 2024, a steep drop from 66 funded in 2021. This signals a significant shift in YC’s engagement with the Indian startup ecosystem.
Why the Drop?
Industry experts cite several key reasons:
- US Parent Entity Requirement: YC requires startups to establish a parent company in the US, Canada, Singapore, or Cayman Islands—a move often seen as complex and costly
- Reverse-Flipping for IPOs: Increasing numbers of Indian startups are incorporating domestically in preparation for Indian IPO routes, avoiding overseas structures and associated tax burdens
- Rise of Local Capital: India’s VC ecosystem has matured, offering strong alternatives, so founders feel less compelled to take the YC route
Broader Context
This trend reflects a larger transformation: Indian founders are opting to stay local, driven by favourable regulations and thriving domestic capital markets. Meanwhile, YC continues focusing heavily on AI-focused startups, which may not align with Indian founders looking at other verticals .
Implications for Indian Startups
- Founders aiming for YC must weigh the benefits of US entity formation against domestic funding or IPO plans.
- With fewer Indian startups in YC batches, network effects and mentorship from YC alumni may be harder to access locally.
- YC’s shift could push the Indian ecosystem to strengthen its own accelerators and capital pathways.
What It Means for the Future
India’s startup landscape is increasingly self-reliant, with vibrant local funding and domestic public markets. While YC’s backing still carries global validation, its reduced footprint—just 4 investments in 2024—highlights a shift in founder preferences toward local autonomy and scaling. YC may need to adapt its terms and outreach to stay relevant in India’s evolving startup ecosystem.
