Y Combinator doubles down on its crypto founders despite market volatility

Crypto founders have heard the saying thousands of times over the past few months: there's no better time to build than in a downturn. In the latest cohort of Y Combinator, there are 30 crypto startups, up from 25 in the previous batch; showing that the accelerator, and the founders it bets on, believe in the adage.

Furthermore, YC seemed to refine the crypto even further even as it reduced its overall lot size this summer. Doing some quick math, crypto startups make up 13% of companies in this summer's YC cohort, while crypto was just 6% in the previous W22 YC batch, meaning that the percentage share of crypto companies participating in the accelerator program has more than doubled in just a few months.

YC's vote is good news for a sector that is experiencing its own volatility. Data from Crunchbase and PitchBook indicate that the total dollar value of Web3 investments could fall by half or more in the next quarter from its previous levels, which hovered around $10 billion in some recent quarters, according to an analysis by TechCrunch+.

The Accelerator's recently developed standard control size could be particularly useful here. YC now invests $500,000 in each accepted startup, an amount that ideally goes further (and louder) in a downturn than in a choppy market.

Overall, the world of startups continues to be a sunny respite from the pessimism that surrounds technology more generally. For example, YC is increasingly betting on crypto founders as outside but adjacent operations do the same. Earlier this month, Y Combinator alumni effort OrangeDAO raised $80 million to support crypto startups and bring more YC founders into the crypto world. Add to that the fact that there's a dedicated grad day to give alumni of the accelerator a first look at the new talent coming out of YC, and the synergies are self-explanatory.

With these factors, let's see what the YC Crypto founders of this lot are prioritizing, keeping fresh capital and instability in mind.

The “crypto winter” that began unfolding in May this year has exposed some major issues in the industry and appears to have inspired founders to create better solutions in the space. This year's batch focused on a few areas of focus, one of the most notable being security: an obvious area of ​​vulnerability within the wider ecosystem, which became even more important after the increase in crypto hacks and phishing attacks this year.

This season's cohort embodies another quirk of the Web3 space: the front-end and back-end of this sector are being built simultaneously. There are a number of startups in the cohort that are working to make crypto more developer and end-user friendly, as well as a range of different infrastructure-focused companies that are building the plumbing behind the scenes of the cryptoverse.

Consumer wallets appear to be a major area of ​​focus this year, perhaps partly in response to the common criticism that Web3 products are clunky and confusing for everyday users. Each of the four startups in this crypto wallet building batch has its own niche. For example, Paris-based Bitstack is building a European-friendly crypto wallet, San Francisco's Sylva is leveraging the growing popularity of staking to allow users to earn interest across different blockchains, and Stackup aims to be the wallet. easiest to use for beginners. .

Even outside of wallets, there is a clear focus on consumer-facing products in this batch, with internet startups Friends and SolStack both looking to capitalize on the growing demand for community and group investments. Lyra helps individuals spend their crypto with her virtual card, while