YC says visas hinder the participation of international founders

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The most recent cohort at Y Combinator has more than 200 startups. More than half of the record S23 startups focus on AI applications, highlighting a dominant trend we can expect to see in the coming years. S23 is notable for at least one other reason: according to YC’s official directory, only one firm in the batch is from India/Southeast Asia.

The declining participation of Indian and Southeast Asian startups in Y Combinator is slowly becoming a trend. The previous batches showed more presence with 10 startups in the previous batch, 20 in S22, 37 in W22, 33 in S21 and 44 startups in W21. (Some Indian startups are registered in the US and may not always clearly identify as Indian, which adds a layer of complexity to the analysis.)

In a statement to TechCrunch, a YC spokesperson credited a storied venture accelerator firm’s move back to in-person programs that require founders to relocate to the US for a quarter of a year.

And for a growing number of international startups, that’s becoming a challenge.

“We’ve found that there is no substitute for personal contact with other founders and investors for three months at YC. However, one of the consequences is that we have seen international founders struggle to participate due to their inability to obtain visas,” the spokesperson said.

The US government has intensified visa scrutiny in recent years, particularly for countries with high visa overstays, due to concerns about national security and illegal immigration. The visa slot for Indian citizens has also been reduced.

“For example, GigaML’s founders are world-class researchers who trained Llama2 to beat Anthropic Cloud 2. But the founders had to do office work on Zoom because their visas were rejected twice by US immigration. The founders want to come to the US but can’t. We need to change the policy,” the YC spokesperson added.

Many founders and investors in India agree with YC’s assessment, but some say the US giant needs to broaden its focus in the region or risk losing its appeal. (The investors and founders spoke on condition of anonymity to avoid upsetting their peers.)

A competing seed-focused program at Peak XV is also increasingly promising to local entrepreneurs, offering more favorable terms and resources tailored to the local context.

A senior executive at one of the high-profile VC firms also emphasized that YC’s drive for Indian startups to register in the US is becoming a liability for many of these firms.

The recent situation with Silicon Valley Bank adversely affected Indian companies that were US-registered and depended on the now-controversial bank for their finances. Moreover, many experienced Indian startups bring their operations back to India, facing tax implications, which is not ideal.

Additionally, as TechCrunch previously pointed out, India currently has limited depth in AI startups, which also played a role in the decline.

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