Y Combinator 2023 Batch Has One Clear Trend Dominating Nearly 70% Of Its 2023 Class

Y Combinator (YC) is considered the premier startup accelerator in the world. Having largely pioneered the modern accelerator model, including the now widely used simple agreement for future equity (SAFE), the accelerator’s thoughts on the startup market might as well be considered law. 

Its track record speaks for itself, having invested in Reddit, Airbnb Inc., DoorDash Inc., Dropbox, Coinbase Global Inc., Instacart, Stripe Inc., Cruise, OpenSea, EquipmentShare and hundreds of others. So when nearly 70% of their newest class all have one thing in common, especially in the current bleak funding environment, it’s important to take notice. 

YC recently released the full list of its winter 2023 class, which includes a total of 183 startups. This is a more than 50% cut from the same time last year and one of the smallest classes in years. This is likely because of the poor funding environment.

One notable trend is that 69% of the startups for this cohort are business-to-business (B2B) software and services. This shouldn’t be a massive surprise because B2B software accounts for roughly 42% of YC’s entire portfolio across all cohorts. But seeing an over 60% increase for its most recent cohort during the poor funding environment is notable.

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While many of its biggest success stories — Reddit, Airbnb, Coinbase, or DoorDash — don’t fall under this category, there’s likely a reason for that. When these consumer-facing companies are successful, it's because millions of consumers use them regularly. But consumers have likely never heard of the majority of the software applications businesses use to make their products successful. 

Of the 354 Top Companies that YC has listed, 154 are in the B2B software category. This data is likely skewed by YC’s heavy investments in the area, but if it isn’t broken, the accelerator is not going to fix it. According to this most recent data, YC is doubling down on the space. 

It’s possible for everyday investors not only to capitalize on this information but also to invest alongside Y Combinator and other VC’s. Wefunder, a popular startup investing platform for retail investors, has 19 YC startups on its platform currently. 

You can find dozens of other examples on StartEngine, Wefunder, and other platforms. While it’s not an indication of success, it's important to understand why investors like YC are interested in these B2B companies and apply those same strategies to your investing thesis. 

For Investors: Another clear trend from YC is over 50 AI startups are in their first 2023 class. One startup capitalizing on both of these trends that investors can invest in (although not YC backed) is RAD AI, the world's first AI marketing platform built to understand emotion. 

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