Startup factory Y Combinator sputters in India

Once a prized springboard for Indian founders, Y Combinator (YC) is facing headwinds in the country.

- Salman S.H.

YC's India portfolio counts four unicorns. ISTOCKPHOTO

The San Francisco-based startup accelerator has seen its India cohorts shrink by over 70% in recent cycles, weighed down by limited success in Series A funding, regulatory hurdles from foreign holding structures that complicate local fundraising and exits and a string of startup shutdowns.

Numbers from data intelligence platform Tracxn show that of 213 India-linked startups backed since YC’s first cohort in the country in the summer of 2012, only about 20 have gone on to raise a Series A—the first round of funding after the seed stage—or beyond. Another 20-odd firms have either shut down or are remain inactive, indicating operations have ceased or revenues have paused.

In July, YC-backed artificial intelligence (AI) services startup CodeParrot shut down, citing cash burn and limited investor interest for follow-on funding rounds. Earlier, vehicle rental platform Drivezy closed in 2021 and was sold to Yamaha Motor Co. after it failed to raise fresh capital.

YC’s own directory currently lists several Indialinked companies—including Toolify, Kisan Network, Fello, WuRi and DocTalk, GoDutch—as inactive, suggesting they are not operational or generating revenue.