Not a Surprise

The venture capital firm Y Combinator frequently claims that it has a laser beam focus on funding new ideas and new technologies.

The reality is that most of their funding supports copycat endeavors, which includes copying efforts funded by Y Combinator.

What, you mean that the gods of finance are engaging in humbug?

The Silicon Valley dream is to build a tech startup that is such a unique idea it alters the commercial universe and turns its founders into billionaires. Participating in the Valley’s most famed startup factory, Y Combinator, is often part of that dream. Airbnb, Coinbase, and Stripe all got started there.

Yet, a deep dive into the data from all of 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 commonly accepts startups that are building similar or nearly identical products to previous YC grads. Some of them are direct competitors; others differ slightly by targeting a new geography (Asia or Latin America), or are a subset of a larger market (point-of-sale software for bars versus coffee shops).

………

This is clearly more than lip service for Tan, who has himself, for instance, championed two police bodycam startups a few years apart: Flock Safety (Summer 2017 cohort) and Abel Police (Summer 2024). Along the same lines, more than a dozen startups building AI code editors went through the YC program between 2022 and 2024 — some in the same batch with the same YC partner.

When asked about its propensity to back competitors, a YC spokesperson said that the organization is more interested in the founders’ backgrounds than their business ideas. “YC invests in founders over ideas, focusing on individuals with the potential to build transformative companies — no matter the space they operate in. Our investment strategy focuses on backing the most promising founders with vision, resilience, and ability to execute, which is clear in our RFS process,” a spokesperson told TechCrunch.

So basically what they are saying is, "We're funding people who look like us, and act like us, and smell like us, frequently friends friends of friends, and brothers-in-law." 

Making the world safe for white tech bros.