Adding Canada Back to Our List of Accepted Countries of Incorporation

Y Combinator faced a policy challenge regarding which countries of incorporation they would accept for startups in their accelerator program. They had previously removed Canada from their list of accepted countries (US, Canada, Cayman, and Singapore) after observing that their top-performing Canadian companies consistently reincorporated in the US. This pattern suggested that US incorporation provided strategic advantages, particularly easier access to investor capital during Demo Day presentations.

However, YC recognized that this policy created unintended messaging problems and barriers for Canadian entrepreneurs. Despite having dozens of Canadian startups in each cohort and hundreds of Canadian founders in their alumni network (including YC co-founder Trevor Blackwell), the exclusion of Canadian incorporation could be interpreted as YC no longer supporting Canadian startups or founders.

YC's solution was to reverse their policy decision and restore Canada to their list of accepted countries of incorporation. This approach balanced their data-driven observations about incorporation advantages with their commitment to supporting diverse founders regardless of geography.

**Key takeaways for product managers:** This case illustrates the importance of considering unintended consequences when making policy changes based on user behavior data. While the data showed Canadian companies eventually reincorporated in the US, removing Canada entirely created unnecessary friction and sent the wrong message to a valuable user segment. Sometimes the optimal solution is to accept suboptimal initial choices while maintaining accessibility, rather than over-optimizing based on downstream patterns.