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Bay Area betting returns to Y Combinator.

Photo: Y Combninator

Y Combinator, the startup incubator that created Instacart, Stripe, and Airbnb, now invests in firms in Africa, India, and beyond. However, as the IT crisis has worsened, Y Combinator has lowered its cohort size, stopped late-stage financing, and hired CEO Garry Tan, entrepreneur and co-founder of Initialized Capital.

It’s a new age, but in some ways, it’s a return to the accelerator’s geographic roots.

86% of founders in the winter 2023 Y Combinator cohort lived in San Francisco. The previous group included 30%, Bay-based founders.

“Hayes Valley genuinely become Cerebral Valley this year – San Francisco will continue to play a huge role in the future of technology and will continue to bring together some of the sharpest minds in the world,” Tan said, opening Y Combinator’s latest Demo Day. “SF Bay Area dreamers and doers may still try their future. and we’re swamped.” The business held dinners and a kickoff event across the Bay for this cohort ahead of its June summer conference in Palo Alto.

Tan refused a TechCrunch interview. The accelerator still offers a virtual demo day, but returning to the Bay Area implies less foreign investment. Compared to 42% in the previous batch, 21% of publicly-announced businesses in winter 2023 are foreign. In addition, the accelerator says Tan interviewed founders months before Demo Day, even though this is his first cohort.

YC hasn’t revealed its startup’s regional distribution in its blog post since last year. India had the most startups outside the US in the last batch, with 21. India has just 11 publicly-announced firms in this batch. In addition, this batch has only 3 African businesses, down 88% from last year.

AI has contributed to the Bay Area’s philosophical rebirth as a startup hub. Entrepreneurs and investors call Hayes Valley “Cerebral Valley,” where desire and opportunity meet, thanks to hacker houses and word of mouth (too much, even).

A third of the firms in this cohort are constructing AI, and a fifth, or 54 overall, are establishing generative AI startups.

Y Combinator’s Silicon Valley refocus isn’t unique. 500 Global returned Demo Day to San Francisco with a global class of businesses. Techstars, the world’s largest pre-seed investor, opened an accelerator in Oakland, California. Amazon unveiled a generative AI accelerator with a San Francisco demo day this week.

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