Being an artificial intelligence company has become the latest trend in startup land. With more and more companies incorporating AI into their existing business model or changing up their marketing to highlight whatever they were already quietly using AI for, it’s no wonder that this trend is making its way into Y Combinator’s latest class.
Angel Investor Gokul Rajaram Weighs In
In a recent tweet, angel investor Gokul Rajaram shared that he had heard from a company in the latest YC cohort that half of the class was looking to use chatGPT. This sparked an investigation into whether or not this claim is accurate.
The Truth Behind the Numbers
A letter circulating among AI researchers asking them to pause development has added fuel to the fire, and with Y Combinator’s demo day next week, we decided to see if the rumors were true. According to YC’s online database, 91 startups (or 34% of the current class) claim to be an AI company or use AI in some way.
Generative AI Takes Center Stage
If you narrow down the numbers to generative AI specifically, we get a whopping 54 companies (or 20% of the class). While this number is 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.
Why This Isn’t Surprising
This surge in AI adoption is not particularly surprising, considering that Y Combinator is an accelerator for companies at their earliest stages. These startups are typically young enough to easily pivot toward whatever the tech trend of the day is or try to knead it into their existing half-baked startup roadmap.
The Hype Cycle and Its Effect on Startups
Some of these YC startups may be purposefully choosing to highlight that their company uses AI or plans to, all in an effort to ride the current hype cycle. We’ve seen more mature startups alter how they market themselves for this reason as well. This isn’t anything new; if you look at past YC cohorts, you can follow the broader venture capital trends each year.
AI’s Potential Impact on Startups
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’re doing to avoid getting left behind in a few years.
Reinventing the Wheel or Building Something New
Some AI companies in the latest YC batch are looking to reinvent the wheel in terms of bringing AI to areas where it’s already being utilized, like helping companies find sales prospects or chatbots for customer service reps. However, there are a number of companies looking to really build off of AI in nuanced ways that are quite exciting.
Examples of Innovative AI Companies
For example, Sidekick makes data infrastructure software for AI chatbots and could prove really helpful for companies looking to integrate AI into their existing customer service resources. Hadrius uses AI to ensure that documents and business practices are SEC compliant. There’s also Creator, which is an AI-powered platform for creating 3D models and animations.
The Future of AI in Startup Land
As the trend of incorporating AI into startups continues to grow, it will be interesting to see how companies choose to use this technology. Will they focus on building something entirely new or try to improve upon existing solutions? Only time will tell.
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