What you should build with AI — Analyzing 400 AI Startups backed by YCombinator
I analysed 400 YC backed startups, here’s what I found
Be careful what you let become critical to you. Try to get yourself into situations where the most urgent problems are ones you want to think about. — Paul Graham
In search of good use cases for AI…
If you struggle with “What should I build with AI that has higher chances of success?”
This post will help you get to an answer.
YCombinator’s (YC) track record in identifying and nurturing successful startups is unparalleled in the tech industry. Their selection process has consistently surfaced companies that go on to reshape entire sectors, making their portfolio a valuable indicator of emerging trends and technologies.
Given the transformative potential of artificial intelligence, YC’s track record and my curiosity to understanding what type of AI companies are attracting invesments, I decided to analyse YC backed AI-focused startups.
I was looking for answers to questions like which sectors are seeing the most AI innovation? What types of AI applications are attracting investment? What backgrounds do successful AI founders have?
To answer these questions, I conducted an extensive analysis of 417 AI companies from YC’s 2023 and 2024 cohorts.
This study aims to provide insights into:
- The hottest industries and sectors for AI startups
- Areas ripe for AI disruption (in the original post)
- AI in emerging technologies like blockchain and quantum computing (in the original post)
- Companies working in AI Safety, Accessibility, Explainability (in the original post)
- Common traits among YC-backed AI founders (in the original post)
- How to find what you should build with AI using the above insights (in the original post)
For those who don’t know, YCombinator is a leading startup accelerator that provides seed funding, mentorship, and resources to help early-stage startups succeed.
How it works at YC:
- YCombinator invests $500,000 in each startup accepted into their 3-month program, in exchange for a small equity stake.
- The program aims to help startups dramatically improve their product and user growth, as well as increase their options for raising additional funding.
Data
I collected the data from YC’s Startup directory, filtered it for 2023 and 2024 Summer and Winter batches.
Cleaned the data, extracted the tags they have and rechecked it from the description of the company to capture their main category.
Overview of the analysis of 417 AI-focused startups
I will be sending this database to all my subscribers, make sure you’re subscribed to High Signal AI to receive this.
I got 417 companies in my data with their description, urls, tags / categories, active founders, and founders’ bio.
If you need a copy of this data, get your copy here.
While looking at a subset of these companies, I have found many exceptional use cases of AI. In fact, part of the data collection process was done using Gumloop (backed by YC), I love using Gumloop over Zapier, I find myself using it more often than I had imagined.
Coming to the analysis…
⚠️ Disclaimer: Some parts of this report is generated with the help of LLMs and the numbers are approximate.
Where are the current hotspots for AI-driven innovation? 🔝
Most common industry intersections with AI:
- Healthcare/Biotech: 45 companies (10.8%)
Example: Elythea (preventing maternal mortality using ML) - Fintech: 38 companies (9.1%)
Example: Arcimus (AI-powered insurance premium audits) - Developer Tools: 37 companies (8.9%)
Example: Sudocode (AI for developer tools) - Sales/Marketing: 34 companies (8.2%)
Example: MicaAI (streamlining sales processes) - Education: 18 companies (4.3%)
Example: Studdy (AI tutor for students)
B2B vs B2C
- B2B: Approximately 338 companies (81.1%):
Sample companies: - GigaML: Helps enterprises build and deploy large language models (LLMs) on-premise.
- Constructable: AI copilot for construction teams.
- AiSDR: Leverages AI to streamline sales processes for B2B companies.
- Corgea: Uses AI to fix vulnerable code, enhancing enterprise data security.
- B2C Companies (18.9% of the portfolio):
Sample Companies: - Rex: AI-powered workout and nutrition coach.
- PocketPod: Offers AI-generated podcasts tailored to user interests.
- Shortbread: Provides a ‘Netflix for comics’ service.
- Roame: A travel platform leveraging AI for trip planning and booking.
Key Takeaways:
- B2B Dominance: 81.1% of YC-backed AI startups focus on enterprise solutions, indicating stronger investor confidence in business-oriented AI applications.
- Untapped B2C Potential: With only 18.9% of startups targeting consumers, there may be significant opportunities for innovative consumer-facing AI products.
- Technical Expertise Drives Focus: The prevalence of founders with strong technical backgrounds (74.8%) likely influences the B2B emphasis and the types of AI problems being addressed.
This is just the the tip of the iceberg, to learn more about type of automations, untapped industries, technical trends, potential in Safe AI, Blockchain and Quantum Computing, read the full report here:
Or watch the video here:
