Y Combinator Often Backs Startups That Duplicate Other YC Companies, Data Shows
In Silicon Valley, the dream is to build a tech startup that not only changes the world but makes its founders billionaires. Many believe this vision can be realized by joining Y Combinator (YC), the renowned startup accelerator that helped launch giants like Airbnb, Coinbase, and Stripe. However, an in-depth analysis of YC's startup portfolio reveals a surprising truth: YC-backed startups don't always need to be original.
YC frequently backs startups that develop similar or even identical products to those of previous YC graduates. In fact, many of these startups end up competing directly with earlier YC-funded companies or operate in a related space with slight tweaks—such as offering the same type of software but for a different market (e.g., point-of-sale systems for coffee shops instead of bars). Others take a similar product and target different regions, like Asia or Latin America.
This trend became apparent after a controversy involving a YC-backed startup called PearAI. The company was accused of cloning another YC product, Continue, by building a very similar code editor. While PearAI's founders admitted to the similarities, they faced backlash, with some critics arguing that the startup was not innovative enough to warrant YC’s support. In response, YC CEO Garry Tan defended the organization’s approach, emphasizing that more competition and options are beneficial. “More choice is good, people building is good, if you don’t like it don’t use it,” he said on X (formerly Twitter).
Interestingly, Tan’s own track record also illustrates YC’s acceptance of seemingly redundant startups. For instance, he supported two separate police bodycam companies over the course of several years: Flock Safety (2017) and Abel Police (2024). Similarly, in the period between 2022 and 2024, YC has accepted over a dozen AI code editor startups—some of which were even part of the same YC cohort.
When asked about the accelerator’s preference for backing competing companies, a YC spokesperson clarified that YC prioritizes the founders over the uniqueness of their ideas. According to the spokesperson, YC’s strategy is focused on identifying individuals who have the vision, resilience, and execution ability to build transformative companies, regardless of whether they’re in a crowded or unique market.
Startups Embrace YC’s Approach
The debate about YC’s strategy is complex, with some founders applauding the approach while others express frustration. Some YC alumni find it problematic when direct competitors emerge from the same batch, especially if they feel their product is being mimicked rather than differentiated. For example, Bryan Onel, the founder of Oneleet, a security startup, shared his frustration on X after PearAI came to light, with others joining the conversation to voice similar concerns.
However, not all YC founders are bothered by competition. Nick Evans, co-founder and CEO of Avocado, a restaurant point-of-sale (PoS) system, sees the value in YC’s openness to competitors. Evans, who previously founded the popular device-tracking startup Tile, which raised significant funds and sold for $205 million, believes that competition isn’t necessarily harmful. “I think it’s stupid that most investors don’t invest in competing companies,” he said. Evans argues that investors who back multiple companies in the same sector can provide deeper insights and help startups succeed. “Startups don’t die by murder; they die by suicide,” he added.
Deckmatch’s Deep Dive into YC’s Product Categories
The recent analysis conducted by Deckmatch, a startup focused on product data and market insights, sheds light on the types of products YC tends to support. The study, inspired by the PearAI controversy, reveals that YC frequently backs duplicative products in certain categories. Deckmatch’s database, which includes over 8 million startups, helped identify several popular product categories where YC has funded multiple startups building similar offerings.
Some of the hot product categories where YC-backed companies frequently overlap include:
AI Code Editors: Beyond PearAI and Continue, other YC-backed startups like Void, EasyCode, and Cosine are building AI-powered code editors.
Food & Beverage / Restaurant PoS Systems: Companies like Avocado, Dripos, and Polo (focused on Latin America) target the same PoS market.
Business Finance & Payroll: Startups such as Warp and Zeal aim to compete with YC graduates Gusto and Rippling in providing finance and payroll solutions.
AI Sales & CRM Tools: YC-funded companies like Apten, Persana AI, and Topo are entering the AI-driven customer relationship management space.
AI Meeting Assistants: YC has backed companies like Circleback, Onward, and Spinach AI, which are all building AI-driven tools for improving meetings and collaboration.
AI Legal Assistants: There’s also significant overlap in the legal tech space, with YC-backed startups like Dioptra, Leya, and Tower working on AI-driven legal assistants.
Additionally, some once-popular categories have seen a decline in YC interest, including:
Crypto Trading Platforms: After Coinbase's success, YC invested in several crypto trading platforms, though the momentum has waned since 2014.
E-commerce Store Platforms: Post-Shopify, a dozen YC-backed e-commerce platforms launched, though activity in this space has slowed in recent years.
Corporate Expense Cards: Following the success of Brex, several companies focused on corporate expense cards also emerged, but the market has cooled since 2018.
Conclusion: YC’s Focus on Founders Over Ideas
While YC’s approach to funding competing or duplicated products might seem counterintuitive, it underscores the organization’s belief that the founders—not the originality of their ideas—are the key to building successful companies. The YC network and its ability to provide insight and support can be a major advantage, even if multiple startups are tackling similar problems.
For aspiring founders, this highlights an important lesson: competition is not something to avoid, but an opportunity to innovate and differentiate in the market. As Garry Tan stated, “More choice is good,” and YC’s strategy continues to reflect that belief. For investors, recognizing that execution and resilience are often more important than a truly unique idea can help identify promising startups—whether they're creating something novel or iterating on existing concepts.