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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

#31

Post by eddythompson80 »

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…

They do exist, but not in the simplistic "AI but for X" you described. The article even explicitly says there were zero of those companies in that round.

You can see "AI startups" examples there, A company that manages your business outbound communication with lots of AI features. AI powered code generation for business operations, Accounting services with lots of AI features, business finance software with lots of AI features

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

#32

Post by tlb »

saubeidl wrote: post #17

YC is going all-in on a technology with no proven business value, driven mostly by ideological desire. It might prove to be their downfall.

When a technology has proven business value, it's too late for seed investment. Existing companies are usually better at commercializing tech with proven business value.

The economic purpose of seed investors is to take on technology-market risk. It's a necessary part of the economy, since the only way to find out if a technology has business value is to have companies build things with it. Without investors willing to take on that risk (and lose frequently -- more than half the time) there'd be only incremental technology progress.

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

#33

Post by dyauspitr »

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…

> going so far as to download the fulltext of every legal ruling ever made in the US -- something like 400GB

Where can I find this?

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

#34

Post by davedx »

Pretty interesting. Also seeing some pivots, Numeral seems to have changed tack a little to focus primarily on a US pain point (sales tax), earlier it was a more general purpose accounting tech product I think. I wonder what other pivots there have been in this batch, and what it means.

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

#35

Post by Ozzie_osman »

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.

One way to interpret this might be that in consumer products, it's easier for incumbents to add AI to improve an already well-marketed product than to build and market one from scratch.

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

#36

Post by spiderfarmer »

keiferski wrote: post #23
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.

Levels. I think we are somewhere between 2 and 3? 1. YC startups target consumers. (B2C) 2. YC startups target businesses. (B2B) 3. YC network becomes large enough that startups can exist purely to serve other YC startups. (B2YC) 4. A new accelerator is launched which aims to fund YC companies that serve other YC companies. (YC4YC) 5. ? Mostly joking, but I do sometimes look at the social media accounts of people in…

Most AI money will be made outside Silicon Valley. If a company can save millions by spending thousands on AI, who profits the most?

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

#37

Post by PeterStuer »

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.

B2C has gone mostly 'free' which means it is either relying on shady business models, sensitive to regulation enforcement and so a risky investment, or a numbers game which requires significant upfront investment with a 'hit' business model return.

In both cases backing 1 company with significant investment is not rational.

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

#38

Post by PeterStuer »

dyauspitr wrote: post #33
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…

> going so far as to download the fulltext of every legal ruling ever made in the US -- something like 400GB Where can I find this?

Maybe he refers to something like https://law.justia.com/

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

#39

Post by econ »

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.

It look like cli to me.

You would rather have a thing that solves a specific problem in a completely reliable way. An application that knows what you want to do because there is only one thing to do in the universe. AI can write it but never be it.

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

#40

Post by chelm »

Adding 4 hypotheses to the dicussion.

B2B opportunities are inherently easier to identify during early-stage evaluations due to clearer revenue models and problem-solution alignment.

YC’s network amplifies B2B growth by directly connecting startups to other batch companies as potential early adopters or customers. I found it interesting that https://www.ycombinator.com/companies/legora (former Leya) is using Reducto. If I get page 9 in the pitch deck correct: https://www.pitchdeckinspo.com/deck/Reducto_02c1f2af-3fa2-4a...

Early-stage B2B startups require less capital and shorter timelines to demonstrate product-market fit compared to B2C.

YC’s founder archetype—technical, execution-driven, and efficiency-focused - naturally gravitates toward building scalable B2B solutions.

Thanks for pointing out Reducto! I added it to my market overview: https://idp-software.com/vendors/reducto-ai/

TLDR

The IDP market remains a massive and growing space. There will be a new segment of the market for simple cases that do not need domain expertise, validation, and integration. Generic Document AI tools, so-called AI wrapper, provide easy wins for basic input extraction / categorization and splitting tasks.

Operational complexity, on-premises, integrating directly with enterprise infrastructure and domain-specific validation across fields mean different workflows require specialized handling. I think this is why Hyland, Abbyy and others can compete with the market, event the tech stack lagging.

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