Y Combinator 2023 Batch Has One Clear Trend Dominating Nearly 70% Of Its 2023 Class
This trend is dominating the #1 startup accelerators first class of 2023.
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 a large portion 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 (but still increasing currently). 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.
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.
