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The dream of Silicon Valley is to build a technology startup, a unique idea that will change the business world and turn its founders into billionaires. Participation in the Valley’s most popular startup factory, Y Combinator, is often part of that dream. Airbnb, Coinbase, and Stripe all started there.
However, a deep dive into the data from all of the nearly 5,000 companies YC has backed so far reveals a surprising truth: YC startups don’t have to be unique. Far from it.
YC typically accepts startups that are building similar or nearly identical products to previous YC graduates. Some are direct competitors; Others differ slightly by targeting a new geographic region (Asia or Latin America), or a subset of a larger market (point-of-sale software for bars vs. cafes).
Start data analysis Deck match She conducted the research, inspired to look into competing YC products after the controversy surrounding a YC-backed startup called PearAI. Critics said PearAI’s code editor product was little more than a clone of another YC product, called “Continue,” and PearAI’s founder basically admitted as much. There were more reasons why Pear found itself in trouble (including the courage of its founders and how it handled open source licensing). But the uproar ended when Bear’s founders pledged to do so Start from scratch.
Gary Tan, CEO of YC, defended the company, and the fact that YC accepted this behavior, by 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 just lip service for Tan, who has himself championed, for example, two police body camera startups a few years apart: Flock Safety (summer 2017 collection) and Abel Police (summer 2024). In the same vein, more than a dozen startups building AI code editing software passed through the YC program between 2022 and 2024 – some in the same batch with the same YC partner.
When asked about its tendency to back competitors, a YC spokesperson said the organization is more interested in founders’ backgrounds than their business ideas. “YC invests in founders rather than ideas, focusing on individuals who have the potential to build transformative companies – regardless of the space they operate in. Our investment strategy is focused on backing promising founders with vision, agility and the ability to execute, which is evident in our RFS process “A TechCrunch spokesperson said.
Some founders like the YC approach
One big advantage that YC offers is its convenient network, where startups often look for clients, partners, and the like. Thus, some graduates dislike competition if they feel that someone else’s product mimics their own, rather than differentiating it. Around the time of the PearAI controversy, Brian O’Neill, founder of security startup Oneleet, was a YC alumnus, Published on X And about his experience with this. A few others chimed in to sympathize. (No one responded to our requests for comment.)
Then again, other YC alumni think this kind of direct competition is a good thing, especially when the same YC partner advises them. Proof of Stake (PoS) systems for restaurants is one area that is very popular at YC, and YC alum Nick Evans, co-founder and CEO of Restaurant PoS Avocado,gets well with competitors.
He should know. Evans founded a device tracking startup called Tile, which went crazy with crowdfunding, raised money from traditional venture capital funds, acquired Apple’s AirTags, and then sold to Life360 in 2021 for $205 million.
“I think it’s stupid that most investors don’t invest in competing companies,” Evans told TechCrunch about YC’s competition. “I want investors who deeply understand my business and industry. How the hell are they going to know anything useful if they haven’t worked with similar companies? Startups don’t die by murder; they die by suicide. You’re not fighting against other startups. You’re fighting against people who don’t give a damn about your product.”
Deep Dive Inspired by the PearAI Controversy
Before we dive into the details of which categories YC particularly favored, it’s worth noting that Deckmatch is not a YC company and has never applied to be one, CEO Leo Gustin told TechCrunch.
Deckmatch was inspired to analyze YC products by PearAI’s position as a beta tester for its new product, AlphaLens. Deckmatch sells product analysis data for approximately 8 million startups to private market participants such as investors, corporate innovation teams, and mergers and acquisitions.
It wants to do for product data what PitchBook did for company-level data, Justin says. 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 so far.
AlphaLens allows Deckmatch customers to search its database to find unique and similar products, create scatter plots, cluster maps, and the like. but YC analysis resultswhich was shared exclusively with TechCrunch, should be fascinating to any founder wondering what types of startups YC tends to accept.
The types of products YC likes, according to the data
According to this data, current popular product categories, each of which includes at least a dozen startups, include:
AI code editors: In addition to “Continue” and “PearAI,” another example is Void (another open source alternative to Cursor, the famous startup Andreessen Horowitz/OpenAI). Then there’s EasyCode, Ellipsis, Cosine, Greptile, and more, each of which applies AI to different programming tasks.
Food, beverage and restaurant point of sale systems: 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 graduates, Gusto and Rippling came many competitors, some of which targeted different international markets. Examples include Warp and Zeal.
Artificial Intelligence Sales and CRM. This is a very hot area of development for big players (Salesforce, Microsoft) and startups. YC alumni include Apten, Persana AI, and Topo.
AI meeting assistants: Circleback, Onward, Sonnet, and Spinach AI are just a few examples.
Amnesty International Legal Assistants: Dioptra, Leia, and Zodiac are some examples.
Then again, many areas were once very popular but have become less popular recently. These include:
Cryptocurrency trading platforms: Due to the success of YC grad Coinbase, YC has been passionate about this for a while, with about a dozen graduates, largely from 2014 to 2022.
Online store platforms: Following Shopify (not a YC alumnus), YC has accepted about a dozen such companies since 2018, with the majority in the 2018 to 2022 timeframe.
Corporate expense cards: After YC alum Brex came several others, mostly from 2018 to 2022.
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