Bengaluru, Sept. 26 -- Once a prized springboard for Indian founders, Y Combinator (YC) is facing headwinds in the country. The San Francisco-based startup accelerator has seen its India cohorts shrink by over 70% in recent cycles, weighed down by limited success in Series A funding, regulatory hurdles from foreign holding structures that complicate local fundraising and exits, and a string of startup shutdowns.

Numbers from data intelligence platform Tracxn show that of 213 India-linked startups backed since YC's first cohort in the country in the summer of 2012, only about 20 have gone on to raise a Series A-the first round of funding after the seed stage-or beyond. Another 20-odd firms have either shut down or are remain inactive, ind...