Lightcone: Consumer is back, What’s getting funded now, The vibes immaculate

Nearly 70% of Winter 2024 companies were working on AI, compared with 8% in Winter 2020. The partners also saw more consumer ideas, after years when founders often chose B2B software instead. They disagreed about the shift: consumer products can be easy to start but hard to grow, while new technology may open room for worthwhile products.

Diana said YC funded about 30% more developer tools companies than four years earlier, as founders build infrastructure for AI products, including tools for retrieval, indexing, and fine-tuning. Open-source developer tools rose from five companies in Winter 2020 to 22 in Winter 2024. The partners pointed to Supabase as an example: a strong Hacker News launch helped it reach 73 companies in the current batch.

Ninety-nine percent of Winter 2024 companies had a technical founder, compared with 88% during the pandemic. The partners linked this to AI creating opportunities that reward deep technical skills, and contrasted it with the earlier rise of tech-enabled businesses such as Flexport. They argued that customer demand and gross margin matter more than whether a company fits a particular label.

The partners said YC funded fewer companies built around local markets, international expansion, and crypto, while AI captured much of technical founders’ attention. International companies fell from about 45% of the Winter 2020 batch to 20% in Winter 2024, and the Bay Area share rose from about 14% during the pandemic to 29%. They also noted that crypto founders faced a difficult market and regulatory uncertainty.

More than 80% of the batch arrived without revenue, and many had not launched a product. The partners described demos including Fume’s AI software engineer and Retail AI’s voice agents as evidence of rapid product progress. Across nearly 300 companies, reported batch ARR grew from $6 million in January to $20 million by Demo Day in April.