Trends from Y Combinator’s Latest Demo Day

It is no secret that Y Combinator (YC) is the most successful startup accelerator. Founded in 2005, YC has funded 2130 companies and 4966 founders. 20 YC alums are valued at over $1B and over 132 YC alums are valued at over $100M. Let’s play a game. You guess a popular and successful startup, we will tell you if that is a YC alum or not. Airbnb? Yes, it’s a YC alum. Stripe? Yup, it’s a YC alum. Dropbox? Yup. Instacart, Brex, Cruise, DoorDash, Gusto, Twitch, GitLab, Mix Panel, Optimizely, Plan Grid? Yes, all YC alums. The combined valuation of the YC startups is more than $150B.

The value add of YC to a startup is tremendous. Among many, one of the most crucial is the help YC gives to help startups land their first customers. “B2B and consumer companies often get their first 40–50 paying customers from the YC network. With that, you not only get first customers, you get the smartest early product feedback possible.”[1] A second major benefit is becoming part of a network of over 4000 founders. And of course, there is the credibility. If you are a YC alum, investors are more willingly to have a look at what you do and ultimately invest.

YC Summer 2019 Demo Day was held last month in San Francisco with a record 174 startup pitches — accelerator’s largest batch so far.

We’ll look at the startups that presented at Demo Day, and try to connect the dots and give you the trends. First, let’s have a look at the Demo Day Statistics:

- Number of companies: 174

- Number of countries: 27

- Percentage of companies outside US: 38%

- Percentage of companies with female founders: 27.5%

- Percentage of India based companies: 5.7%

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Geoff Ralston, President of Y Combinator, kicking off Summer 2019 Demo Day.

Photo curtesy of Duygu Clark.

Based on the startups of YC Summer 2019 Batch, here are the trends:

- The rise of “Remote Working” Startups: Remote work has becoming the new norm in tech companies. Gallup’s State of the American Workplace report reveals that engagement climbs when employees spend some time working remotely and some time working in a location with their coworkers. [2] Moreover, a study by Stanford University states that remote work increases employee retention. [3] Another important drive of this trend is the fact that by 2020, Generation Z — people born after 1996 — will comprise 36% of the global workforce. So, in the light of all above, we can clearly say that “Remote Working” is not going anywhere soon. Thus, we will hear more startups that make remote working easy/efficient/scalable like Tandem, Tasked and PopSQL from this batch.

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- Digital Transformation of Emerging Countries: There are many startups who target emerging countries with copycat business models of proven US startups. For example, Green Tiger aims to be Robin Hood for India while PayMongo claims to be Stripe for the Philippines. The pace of digital transformation varies depending on the geographic region. Bearing in mind that emerging countries are mostly following the footsteps of developed countries, we will keep seeing X for India, Y for Indonesia.

- More and more Indian Startups: As we mentioned before, the percentage of India based companies in this batch is 5.7%. YC CEO Michael Siebel explained that YC’s focus on India will continue. So, it is no surprise that we can expect more Indian startups in the upcoming batches. It seems that India is creating its own startup ecosystem rather than being just a cheap software talent house.

- SaaS is Still Hot: SaaS is still a popular business model. We are not sure whether startups or investors love SaaS more :) Not surprisingly, SaaS business models are dominating the batch. Mighty, Safely Deposit, Courier, InEvent, ActionDesk, Wasmer, Dex, Monaru are just some of the SaaS startups of the batch.

- Other Dominating Areas: Out of 174 startups, there are startups from Biotech to Space technologies to Food Technologies to Virtual Reality. Here are the dominating areas: Healthtech, Fintech, AI/ML, HRtech and Real Estate tech. Which of these startups will become unicorn? We’ll all wait and see :)

We are already looking forward to meeting the next batch of YC startups!




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