Y Combinator to portfolio founders: 'Plan for the worst.'

The apocalypse is coming, at least according to one of the world's biggest startup accelerators.

Y Combinator sent an email to portfolio founders this week, obtained by TechCrunch, advising the startups to "plan for the worst" as the market turbulence has prompted many companies to initiate layoffs, cost-cutting measures and hiring slowdowns.

“If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn," said the email, which was titled "Economic Downturn." "Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan."

The note advised founders to "cut costs and extend your runway within the next 30 days."

The famed startup accelerator is falling squarely into the camp that believes the hot funding environment of the last couple of years is decidedly over, and early-stage startups will have to prepare to hunker down and live off of "lower valuations, lower round sizes and many fewer deals completed."

They also predicted that the downturn will disproportionately impact "international companies, asset heavy companies, low margin companies, hardtech, and other companies with high burn and long time to revenue."

Finally, the note ended with a link to a 35-minute YouTube video from Y Combinator called, "Save Your Startup during an Economic Downturn."

This month has seen a slew of privately backed startups announcing layoffs, most notably Cameo and Mural.

Even the big tech giants are feeling the cost-cutting pressure amid rising inflation, rising interest rates and a looming bear market. Netflix laid off 150 employees this week amid stalled growth, a month after laying off Tudum staff. Meta, Robinhood, Salesforce and Uber all initiated hiring freezes or layoffs as well.

PSA: If you're going to do a mass layoff, don't do it like Carvana.