YC Graveyard: 821 inactive Y Combinator startups
A crowdsourced “YC Graveyard” listing 821 inactive Y Combinator startups prompts debate about how many YC-backed companies actually fail, how to define “dead” versus “zombie” or “lifestyle” businesses, and how incomplete YC’s own “inactive” tag may be. Commenters use the list to examine structural issues in venture-backed startups: opaque outcomes (acquihires, quiet shutdowns), investor preferences for fast failure over modest but enduring profits, and tensions between founders’ salaries, employee risk, and preferred-share investors. Several also argue that YC has shifted toward hype-driven, AI-centric funding and that its rhetoric of being founder-friendly can clash with the economic realities and power asymmetries of venture capital.
Perceived usefulness vs startup success
- Commenters note that “sounding useful” doesn’t predict success; many “obviously useful” products fail.
- Stripe and Airbnb are used as examples: both entered markets that already had solutions (payments, accommodation) and didn’t sound obviously huge to many early observers.
- Airbnb’s eventual success is tied to later emergence of commercial/“unlicensed hotel” hosts, which founders likely didn’t fully foresee.
- Some argue that products that don’t sound useful may face less competition and become winner‑take‑all if a new market appears.
YC failure rate, “inactive” definition, and zombies
- Using ~4,000 YC startups and 821 marked “inactive” on YC’s own site gives ~20%, but many think this understates failures.
- Reasons: companies rarely announce shutdowns; some are zombies (small, long‑running, not growing); recent cohorts haven’t had time to fail.
- Acquihires and low‑value exits often look like wins but can still be financial losses for YC.
- Methodology of the graveyard: filter YC’s company list by “Inactive,” so it’s a lower bound and misses some known dead startups.
- Several users point out errors: active or acquired companies misclassified; some failed ones missing.
Founder outcomes and founder pay
- Post‑failure paths include: regular jobs, joining later‑stage startups, big tech roles, or continuing as high‑paid founders of “zombie” companies.
- Debate over founders paying themselves $200k+ at pre‑product‑market‑fit startups:
- Some see it as irresponsible or misaligned with “ramen profitability” ideals.
- Others argue high cost of living, debt, and health care justify it; investors accept these terms in competitive markets.
YC, incentives, and capital structure
- Some see YC as the best of a generally weak incubator landscape, with strong brand and founder funnel.
- Others criticize a shift toward hype, AI‑heavy, SF‑centric, young‑founder cohorts and a more predatory, self‑interested stance.
- Discussion centers on SAFEs, preferred shares, liquidation preferences:
- Investors seek downside protection; employees and common shareholders often bear more risk.
- Tension between YC’s “founder‑friendly” narrative and standard investor protections is highlighted.
Lifestyle businesses, zombies, and investor preferences
- Distinction made between:
- Lifestyle/small businesses that earn healthy, steady profits but don’t scale.
- Zombies that barely sustain founders and staff, can’t grow, and slowly burn remaining capital.
- VCs prefer big wins or clear failures they can write off; steady but modest outcomes can trap capital for years.
- Some argue traditional “small business” success is undervalued in tech culture despite being a rational goal for founders.