Y Combinator cut Canada from its acceptable countries of incorporation. Now, it’s backtracking.
Last week, a Canadian news outlet noticed a alter to Y Combinator’s standard deal description. The site applyd to list the US, Canada, Singapore, and Cayman as acceptable countries of incorporation for YC startups. Canada was suddenly gone.
Y Combinator CEO Garry Tan initially deffinished the choice on X. YC-backed Canadian startups that reincorporated in the US had twice the average valuation as those that didn’t, he wrote.
“There are lots of reasons to build great companies in Canada, and there are lots of great YC and non-YC startups that thrive and are creating the Canadian tech scene great,” he wrote a few hours later. “Where you are incorporated increases your access to capital. That’s it.”
Tan wrote that “clout farmers” were attempting to “build it drama.” The online backlash was indeed swift. Canadian investors and founders sounded off, and some accapplyd the choice of being politically motivated.
The development also happened at a time when Canada’s relationship with the United States has fractured over the last year. Canadian travelers are visiting the US less, while interest in acquireing domestically produced goods has surged.
Now, YC is reversing course. While the site has yet to be updated, the accelerator has since alterd its policy to allow Canada-incorporated startups back in.
“We don’t want to suggest that we no longer fund Canadian startups or Canadian founders,” Tan wrote in a blog post. “If you’re a Canadian founder, we welcome you to apply to YC.”
Tan wrote that the accelerator chose to reshift Canada after it noticed its “top-performing Canadian companies reincorporated in the US.” Incorporating in the US gives founders simpler access to investor capital, he wrote.
“We invest in dozens of Canadian startups each year and have hundreds of Canadian founders in our alumni network, including one of YC’s founders, Trevor Blackwell,” Tan wrote.
Blackwell founded the robotics company Anybots and has since retired from YC. Instacart, one of YC’s largegest success stories, was founded by Canadian Apoorva Mehta.
Tan was also born in Winnipeg, though his family later relocated to California. He struck a celebratory tone as he announced the alter on X.
“Oh Canada, don’t call it a comeback!” he wrote.
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