Y Combinator leads accelerators in unicorn-creation rate

Y Combinator made its name by backing companies such as Airbnb and Reddit early on, and it has ridden that wave to become the accelerator of choice for founders.

An estimated 4.5% of the startups that have gone through Y Combinator since 2010 have become billion-dollar companies, more than Techstars, MassChallenge, 500 Global or SOSV, according to a PitchBook analysis on large accelerators.

The unicorn creation rate for cohorts between 2010 and 2015 was even higher, at approximately 5.4% of all startups. Y Combinator has also outpaced other top accelerators in cumulative capital raised, with approximately $80.9 billion in total from its 2010 to 2022 cohort companies. Two-thirds of the accelerator’s total value has come from its unicorns, a much higher rate than its competitors, the analysis shows.

Y Combinator, founded in 2005, was one of the earliest accelerators following the 2000 bursting of the dot-com bubble, and its success spawned a wave of imitators. The value of these programs includes access to a network of alumni founders, introductions to mentors, educational resources, and an endorsement from an established brand name.

Y Combinator is becoming more selective, falling back on its core strategy. In March, the accelerator shuttered its late-stage growth program and laid off 20% of staff. Last year, the company slashed its startup intake by 40%.

Every accelerator markets itself differently to stand out from the crowd. MassChallenge, for example, is headquartered in Boston and benefits from the technical talent coming out of the city’s various prestigious universities and hospitals.

But some smaller venture studios and accelerators have struggled to attract LP funding through the downturn. Fintech-focused Fractal Studio recently said it would stop creating new startups and has laid off about 25% of its staff since December, Business Insider reported.

There has been a proliferation of new accelerators and incubators over the last decade—but not all programs are created equal, according to Upal Basu, managing partner at NGP Capital.

“There’s only so much talent in the world, but there’s also only so many people who can coach other people,” Basu said. “Raising capital is not the same thing as developing talent.”