Y Combinator has named venture capitalist Gary Tan as its next president

Y Combinator has chosen an outsider as its next president — sort of.

The prominent Bay Area-based accelerator has tapped venture capital and Y Combinator alumnus Gary Tan as the fourth leader in its seventeen-year history. In January, Tan will replace President Jeff Ralston, who assumed the mantle in 2019.

“It’s a community where people’s dreams, more or less, come true in many ways,” Tan told Forbes in an exclusive interview. “The chance of you coming back and helping that happen is one in 10 billion lifetimes.”

When he takes the top job at Y Combinator, Tan will step down from a permanent role at Initialized Capital, the firm he founded with Reddit co-founder Alexis Ohanian in 2012. Early investor in cryptocurrency exchange Coinbase, grocery delivery service Instacart and supply chain software unicorn Flexport, Tan has appeared on the Forbes Midas List for the past four years, most recently ranking at No. 28. He debuted at No. 4 on the inaugural Forbes Midas Seed 2022 list.

In choosing Tan to lead YC, the accelerator’s board brings one of its most distinguished alumni back to the fold. Tan and Ohanian began investing as seed investors in 2011 while still partners at YC before stepping down to focus on the firm full-time. (Ohanian later left to start a new venture capital firm, Seven Seven Six, last year.) But Tan’s ties to the accelerator remain deep: The internal directory he created, cheekily called Bookface, remains a key part of the network that YC offers its entrepreneurs.

“I never stopped thinking about Gary as part of YC,” says outgoing President Ralston Forbes. “It feels like coming home.”

Tan will begin leading Y Combinator at a transitional time for the accelerator, among the world’s largest and most influential with alumni including home-rental service Airbnb, payments leader Stripe and online collaboration company Dropbox. Founded in 2005 by married couple Paul Graham and Jessica Livingston and two others in Cambridge, Massachusetts, Y Combinator moved to the Bay Area and became synonymous with the Silicon Valley startup scene in the decade that followed. Its semi-annual “batches,” three-month programs where companies work closely with YC partners, advisors and alumni before pitching to investors and journalists as part of Demo Day, have a typical acceptance rate of 1.5% to 2%, according to its website. YC has funded more than 3,000 companies to date and 25 unicorns valued at $1 billion or more.

Under Graham’s successor Sam Altman and then Ralston, Y Combinator underwent a period of rapid growth that both expanded its reach and prominence in the tech ecosystem. YC now expects to invest $500,000 in participating companies in exchange for at least 7% equity, and potentially much more, depending on the company’s later funding rounds. In 2021, even as YC went completely remote in response to the Covid-19 pandemic, it funded 750 companies, a Y Combinator record. Ralston made headlines in December 2021 when he told the Newcomer blog that he envisioned a way to fund 1,000 startups in a batch.

This past summer, however, Y Combinator cut its summer batch by 40%. Other YC initiatives, such as one-time plans to move the accelerator’s headquarters from Mountain View, California, to San Francisco, have been quietly abandoned.

In separate interviews, Tan and Ralston took a line popular among current and former YC staffers: that doubts about YC getting too big, or “jumping the shark,” are almost as old as the accelerator itself. Both say they feel confident that the organization’s engineer-led ethos will always drive it to experiment unashamedly on behalf of its entrepreneurs. “I don’t know if there will be batches of 1,000 in the near future, but I believe the potential is there,” Ralston says. “We’re a big world.”

Once Tan assumes full leadership duties, Ralston plans to transition from Y Combinator, he says; there are no plans for him to stay on as chairman, as Altman was originally expected to do. Ralston hopes his more than three-year legacy at the accelerator will be remembered as one of stability, a time when the program’s long-term future solidified into something more akin to an academic institution like Stanford University. “I made changes to the direction Sam was going and I suspect that will be the case [that way] and with Gary,” he says.

In his absence, Tan’s VC firm Initialized will be led by managing partners Jen Wolfe and Brett Gibson moving forward. Both are longtime associates of Tan’s: Wolf was Tan’s boss before applying to Y Combinator early in his career; Gibson was Tan’s co-founder at Posterous, the company he applied with. In an interview, Wolff says she has already been running day-to-day operations at Initialized for the past year as its president. The firm will continue under the same brand and remaining partnership, she adds.

“Gary is not zero-sum in his views on the world or managing people. Someone doesn’t have to lose for someone else to win,” says Wolfe. “He wouldn’t do this if he didn’t think we were ready.”

Still, it’s a surprising move for Tan, who last year said Forbes in a profile that his early investment success gave him a “golden ticket” to build Initialized into a lasting venture capital institution. (In an interview last week, Tan cited the same 2021 article back on Forbes(noting that he said at the time that he hoped to build a company that would outlive its founders.)

Capital is abundant, Tan argues; opportunity for entrepreneurs, less. He draws on his own personal story, growing up, he says, in the East Bay with food insecurity and learning to code to make web pages to help his parents put a down payment on a house.

“YC is a beacon where you don’t have to know anyone,” says Tan. “People have given me so much, taught me so much, and I have to give back.”