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What's working for YC companies since the AI boom

jamesin.substack.com

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Re: What's working for YC companies since the AI boom

#61

Post by ai-christianson »

bgnn wrote: post #57
ai-christianson wrote: post #54

Earlier quoted context omitted.

But hardware is super capital intensive, right? So the right kind of investor could add significant value if they were aligned.

That's often potential customers. It's common to have other HW companies invest in HW start ups. Unfortunately there are not many good VCs for HW development. Even the ones marketing themselves as much don't like the meager returns in 5 to 10 years.

Might be a ridiculous question (I'm a software guy,) but is it at all possible to go the other way and increase the velocity of shipping and iterating on hardware to make it fit into the standard VC timelines?

Re: What's working for YC companies since the AI boom

#62

Post by btown »

keiferski wrote: post #25
A_D_E_P_T wrote: post #20

Do "AI Startups" even make sense? There appears to be a pattern. Unmet need is identified: "I want ChatGPT -- but able to read PDFs" or "I want ChatGPT -- but able to do research and produce lengthy reports." Startup gets funding for this and, if they're lucky, releases a rough beta that leans heavily on the OpenAI API. Two months later OpenAI launches a better, much more polished and seamless version, which is integ…

Yes, they do, because ultimately software UI is what gets regular people to use things. To a technical user there may be little/no difference to you between prompt engineering into a chat box vs. clicking a button with premade text slots. But to the average non-programmer, a chat app like ChatGPT is somewhat pigeonholed into the chat format, and so use cases that don’t lend themselves to this interface will be outcom…

We should never forget the infamous 2007 Dropbox comment! https://news.ycombinator.com/item?id=9224

Re: What's working for YC companies since the AI boom

#63

Post by JumpCrisscross »

ai-christianson wrote: post #54
cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

But hardware is super capital intensive, right? So the right kind of investor could add significant value if they were aligned.

> the right kind of investor could add significant value if they were aligned

Those investors rarely brand themselves as VCs. To their portfolio companies or LPs.

Re: What's working for YC companies since the AI boom

#64

Post by JumpCrisscross »

shivbhatia wrote: post #11
lubujackson wrote: post #4

0 consumer products is wild. I know SaaS has taken over from a bang for buck perspective, but this seens like a too-narrow approach by YC.

Hard to beat the chat interface when it comes to consumer products if you ask me. Pre-AI I often wished I could just talk to an application rather than try to figure out how the buttons the developers had chosen to wire up mapped onto what I was trying to achieve.

> Hard to beat the chat interface when it comes to consumer products

How about it just working? No need to ask. The way a great assistant just makes the things you need and want happen.

Re: What's working for YC companies since the AI boom

#65

Post by [deleted] »

cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

[deleted]

Re: What's working for YC companies since the AI boom

#66

Post by adamsuskin »

> Obviously, if one of these funds gives you a term sheet, it’s a no-brainer.

It isn't a no-brainer. Many founders in the new era are weighing bootstrapping, seed-strapping, and VC money without a clear answer.

If you can see a path to growing MMs of revenue with little need for staff, you may just not go do a follow-on round.

Re: What's working for YC companies since the AI boom

#67

Post by whinvik »

I feel like there's a clear trend but maybe that's just me.

The report from a year ago had lots of AI Text infra companies, and now its mostly AI text product companies. We needed the first to get to the second layer.

And next we have a few AI audio infra companies, so probably a year from now, we will have AI audio product companies. Maybe the same with video.

Re: What's working for YC companies since the AI boom

#68

Post by jsheard »

bgnn wrote: post #55
cushychicken wrote: post #52

zero… hardware startups in the Series A data I have 15 years of hardware development experience and I would stay far, far away from anyone in the VC space. I simply don’t believe that anyone in VC is capable of aligning their own incentives to the timescale that a hardware based business requires to show a return.

I second this. I've worked for several early stage HW start-ups (ASIC development). VC backed ones ended up in a weird state of not being able to move from proof of concept to production because at that point the VCs were out of patience and wanted returns for their money. Having spent 10s if millions and now, 2-3 years later, requiring even more didn't align with what they were used to. This ended badly for these co…

> VCs were out of patience and wanted returns for their money. Having spent 10s if millions and now, 2-3 years later, requiring even more didn't align with what they were used to.

Those numbers seem quaint now compared to OpenAI's "can we borrow $1B, actually $10B, hang on we need $50B, sorry we meant $500B, also we might need $7T" investment death spiral. Maybe when this is over VCs will be glad for how cheap and low-risk hardware development is, relatively speaking.

Re: What's working for YC companies since the AI boom

#69

Post by throwaway12345t »

many YC companies have hit the Series A benchmark and just skipped it, a change from the past

1m, 2m ARR don’t have the same impact in fundraising so later Series A are bound to happen and are not a great indicator imo of how well a company is doing

throwaway but several from my batch (including us) are cash flow positive, higher ARR than these Series A companies and not on the fundraising treadmill

that cohort of YC companies is not represented in data anywhere because from what I’ve seen it is a bit of an anomaly vs previous YC batches

Re: What's working for YC companies since the AI boom

#70

Post by yesimahuman »

adamsuskin wrote: post #66

> Obviously, if one of these funds gives you a term sheet, it’s a no-brainer. It isn't a no-brainer. Many founders in the new era are weighing bootstrapping, seed-strapping, and VC money without a clear answer. If you can see a path to growing MMs of revenue with little need for staff, you may just not go do a follow-on round.

Just raising as much money as you can when you can from even great firms is how so many founders get themselves in big trouble down the road and reduce their exit optionality or introduce deathly signaling risk. But if you can take lots of secondary to derisk and build that nest egg I guess have at it
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