The Silicon Valley dream is to create a tech startup that has a unique idea that changes the business world and makes its founders billionaires. Participating in Y Combinator, the Valley’s most popular startup factory, is often part of that dream. Airbnb, Coinbase, and Stripe all started there.
Still, a deep dive into the data on the nearly 5,000 companies YC has backed to date reveals a surprising truth: YC startups don’t have to be unique. Far from it.
YC generally accepts startups that are building similar or nearly identical products to previous YC grads. Some of them are direct competitors. Others are slightly different, targeting new geographies (Asia or Latin America), or are a subset of a larger market (point-of-sale software for bars vs. coffee shops).
Beginning of data analysis Deck Match Conducted research after controversy over a YC-backed startup called PearAI, motivated to look at competing YC products. Critics said that PearAI’s code editor product was little more than a clone version of another YC product, called Continue – and PearAI’s founder necessarily admitted as much. There were other reasons why Peer found itself in hot water (including the bravado of its founders and how it handled open source licensing). But the upheaval ended with Pierre’s pledge to the founders. Start from scratch.
YC CEO Gary Tan defended the company, and the fact that YC condoned this behavior. Posting on X“More choice is good, building people is good, if you don’t like it, don’t use it.”
This is clearly more than lip service to Tan, who himself, for example, has championed two police body cam startups a few years apart: Flock Safety (Summer 2017 cohort) and Able Police (Summer 2024 ). Along those lines, more than a dozen startups building AI code editors went through the YC program between 2022 and 2024 — some with a single YC partner in the same batch.
When asked about the tendency to back competitors, a YC spokesperson said the organization is more interested in founders’ backgrounds than their business ideas. “YC invests in founders on ideas, focusing on individuals who have the potential to build transformative companies – no matter where they work. Our investment strategy “The focus is on backing the most promising founders with vision, flexibility and the ability to execute, which is evident in our RFS process,” a spokesperson told TechCrunch.
Some founders like YC’s approach.
One of YC’s big advantages is its casual network, where startups often find customers, partners, and the like. Consequently, some alumni dislike competition if they feel that another’s product imitates theirs, rather than differentiates it. At the time of the PearAI controversy, YC alum Bryan Onel, founder of security startup Oneleet, Posted on X. About your experience with it. A few more people came in to sympathize. (One did not respond to our requests for comment.)
Then again, other YC alumni believe that this kind of direct competition is good, especially when the same YC partner gives them advice. Restaurant PoS systems are an area that has been popular at YC, and YC alum Nick Evans, co-founder and CEO of Restaurant PoS avocadois fine with competitors.
He should know. Evans famously founded Tile, a device-tracking startup that went crazy with crowdfunding, raised money from traditional VCs, took on Apple’s AirTags, then bought Life360 for $205 million in 2021. sold
“I think it’s silly that most investors don’t invest in competitive companies,” Evans told TechCrunch about the YC competition. “I want investors who deeply understand my business and industry. If they’re not working with similar companies, how are they going to know anything useful? Startups don’t die from murder. They You’re not fighting against other startups. You’re fighting against people who don’t care about your product.
Inspired by the Deep Dive Peer AI controversy
CEO Leo Gasteen told TechCrunch that before diving into the specifics of the categories YC specifically favors, it’s worth noting that Deckmatch is not a YC company and has never applied to be one. is
Deckmatch was inspired by PearAI’s situation to analyze YC products as a demo test of its new product AlphaLens. Deckmatch sells product analysis data on nearly 8 million startups to private market participants such as investors, and corporate innovation and M&A teams.
Gestein says it wants to do for product data what Pitchbook did for company-level data. Earlier this month, Deckmatch raised a $3.1 million seed round co-led by Alliance VC and Luminar Ventures, with participation from its pre-seed investors First Degree Capital and Skyfall Ventures. It says it has raised $4.2 million to date.
AlphaLens lets Deckmatch users comb through their database to find unique and similar products, create scatter charts, cluster maps and the like. But Results of YC analysisShared exclusively with TechCrunch, it should be interesting for any founder wondering what kind of startups YC accepts.
Types of products YC likes according to data
According to this data, the current popular product categories, with at least a dozen startups each, include:
AI code editors: Beyond Continue and PearAI, another example is Void (another open-source alternative to Cursor, the famous Andreessen Horowitz/OpenAI-backed startup). Then there’s EasyCode, Ellipsis, Cosine, Greptile, and more, each applying AI to different coding tasks.
Food/Beverage/Restaurant Point of Sale System: Most PoS startups were accepted into the program between 2020 and 2023, including Avocado, Dripos, or Latin American Startup Polo.
Business Finance/Payroll: With the success of YC alums Gusto and Rippling came many competitors, some aimed at different international markets. Examples include Warp and Josh.
AI Sales and Customer Relationship Management. This is a very hot growth area for big players (Salesforce, Microsoft) and startups. YC alums include Apten, Persana AI, and Topo.
AI Meeting Assistants: Circleback, Onward, Sonnet, and Spinach AI are a few examples.
AI Legal Assistants: Dioptra, Lea, and Tower are some examples.
Then again, many areas were popular but less recently. These include:
Crypto Trading Platforms: Given the success of YC grad Coinbase, YC had been gunning for it for a while, with about a dozen grads, mostly from 2014 to 2022.
E-Commerce Store Platform: In the context of Shopify (not a YC alum), YC has accepted about a dozen companies since 2018, the majority in the 2018 to 2022 timeframe.
Corporate Expenses Card: YC alum Brex was followed by several others, mostly from 2018 to 2022.
Credit : techcrunch.com
