Being an artificial intelligence company has become the soup du jour of startup land. Companies are scrambling to either incorporate AI into their existing business model or change up their marketing so whatever they were already quietly using AI to do is front and center. Y Combinator’s latest class is no different.
Angel investor Gokul Rajaram tweeted recently that he had heard from a company in the latest YC cohort that half of the class was looking to use chatGPT. Now, with a letter circulating that asks AI researchers to pause development and with YC demo day next week, we decided to see if that checks out. Turns out, it’s not that far off.
Ninety-one startups, or 34%, of the current YC class list that they are an AI company or use AI in some kind of way, according to the accelerator’s handy online database. If you narrow that down to generative AI you get 54, or 20%. While not quite half, it’s still striking when compared to past cohorts. In previous years, the highest number of companies using generative AI in a single YC class was nine, and a count of more general AI usage brought the number to 44; both numbers hail from classes much larger than the current one, too.
This isn’t particularly surprising.
Y Combinator is an accelerator for companies at their earliest stages. This generally means startups that don’t have customers or many stakeholders yet, but rather are entities led by founders who know what they want the company to achieve and an idea of how to build it. The startups are typically young enough to both easily pivot toward whatever the tech trend of the day is, or try to knead it into their existing half-baked startup roadmap.
Plus, some of these YC startups are probably purposefully choosing to highlight that their company uses AI or plans to that maybe wouldn’t otherwise if not for the current hype cycle. We’ve seen more mature startups — like Tome — altering how they market themselves for this reason, too.
Quite frankly you can’t blame the YC companies for leaning into AI. If you saw VCs dumping dollars — in a tougher fundraising market, no less — into a technology like AI that you could implement into your own business, why wouldn’t you?
This isn’t anything new, either. If you look at past YC cohorts, you can follow the broader venture capital trends each year. There are less than half the number of web3 and crypto startups in the current batch compared to the programs in 2021 and early 2022. You can see the same with fintech, which blossomed in 2021 before petering out in 2022, in line with broader financing trends.
Many believe — and likely rightfully so — that AI will prove to be a transformative technology potentially unlike anything we’ve seen before. Most founders who are entering entrepreneurship are in it for the long haul, so it makes sense to incorporate the latest technology into what they are doing to avoid getting left behind in a few years.
Sure, some AI companies in the latest YC batch are looking to reinvent the wheel in terms of bringing AI to areas it is already being utilized, like helping companies find sales prospects or chatbots for customer service reps. But there are a number of companies looking to really build off of AI in nuanced ways that are quite exciting.
For example, Sidekick, which makes data infrastructure software for AI chatbots, could prove really helpful for companies looking to integrate AI into their existing customer service resources. Another is Hadrius, which uses AI to ensure that documents and business practices are SEC compliant. There’s also CreatorML, which allows users to use AI to predict how many views or how much engagement a YouTube video will get.
So while it’s easy to poke fun at startups and VCs alike for always being the first to board the hype train, for a lot of these YC companies, it actually makes a lot of sense. It’s also not a bad thing to see smart folks jumping at the chance to build off of innovative tech.
Plus, be honest: Wouldn’t it be weirder if the current YC batch of startups were completely ignoring the broader market trends? I think so.
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