🗺 Y Combinator - Summer 2022 Batch - Back to Basics

Overlooked #122

Sep 19, 2022

Hi, it’s Alexandre from Eurazeo (ex. Idinvest). I’m investing in seed & series A consumer and consumer enablers startups all over Europe. Overlooked is a weekly newsletter about venture capital and underrated consumer trends. Today, I’m digging into YC’s most recent batch to spot recurring tech trends from the 240 participants.

As usual, I reviewed the startups in the latest YC batch (see previous editions here: YC-W20, YC-S20, YC-S21, YC-W22). As a reminder, YC is the largest accelerator worldwide. It’s a 12-week remote program that happens twice a year and YC invests $500k in every company it accelerates.

In this post, I will share some metrics on the batch and some trends I’ve observed: (i) no-code, (ii) “X for Y startups”, (iii) e-commerce, (iv) consumer, (v) vertical solutions for IRL entrepreneurs, (vi) finance and (vii) climate. It’s not an exhaustive list of trends. It’s more based on my personal interests.

Metrics

240 startups participated in YC’s latest batch. It’s a 40% decrease compared to the previous batch. YC may have reduce the size of the batch to increase the average quality of selected companies and to re-introduced an in-person component into its program. YC startups were invited to San Francisco for at least the 1st week of the batch. 50%+ of companies stayed in the US during the whole batch.

YC shared some acceptance metrics. 50% of startups in the batch had applied more than once to YC. YC has a 1.3% acceptance rate (19,000 applications).
15% of the companies have a woman as founder which is not a great ratio compared to previous batches but which remains above what we see in the venture market.

YC recruits startups mostly from 4 key sectors - B2B software, consumer, healthcare and fintech - accounting for 90% of the companies in the batch.

Contrary to the 3 previous batches, there are more US startups (59%) than non US startups in the YCS22 batch. Europe accounts for 14% of the startups in the batch and France for 3.3% (8 companies).

No-Code

I see two no-code trends: (i) no-code tools targeting a specific persona (e.g. ops teams, legal teams) and (ii) hybrid platforms combining the simplicity of no-code with the modularity of coding to adapt to your specific workflows and issues.

Blitz (France-based, founded in 2022) is a no-code platform for operations teams to build internal apps without being dependent on developers bandwidth or on third party SaaS applications not customised for your workflows.
Flycode (US-based, founded in 2021) makes web-apps editable (e.g. text, images, links) without coding to avoid unnecessary back and forth between developers and other teams (product, content, marketing).
Ruleset (US-based, founded in 2022) empowers risk and legal teams to make lending decisions without requiring engineers to pull and analyse data thanks to a no code platform in which you create your rules and data is automatically analysed.
Windmill (France-based, founded in 2022) is an open-source platform for developers to build internal apps, workflows and integrations based on Python script. It provides an experience similar to no-code platform with the possibility for developers to audit the code behind and tweak it if needed.

"X for Y startups"

I introduced this concept of “X for Y startups” when I looked at the previous batch. X is a successful startup and Y can be a geography (e.g. Airbnb for Latam) or a category (e.g. Uber for dog walkers). In this batch, examples of successful startups which served as inspiration include Plaid, GoPuff, Moonpay, Bill.com, Pave or Marqeta.

Rio (Mexico-based, founded in 2022) is a Moonpay specifically built for Latam meaning it’s a crypto on and off ramping solution. It adapts the product to Latam by being compliant with local regulations and by working with local partners (distribution channels, banks).
Krave Mart (Pakistan-based, founded in 2021) is a GoPuff for Pakistan. It’s a quick commerce offering delivering 2.5k items within minutes with a multi-category positioning from day 1 (grocery, mother & baby, health, beauty, household, electronics).
Adbridge (India-based, founded in 2022) is a Flexport for the APAC region. It helps importers/exporters to ship freight in/out the APAC region with a digital platform covering the full shipment lifecycle (booking, optimised container load plans, online communication, handling shipping compliance documents).
Plaid
- Axle (US-based, founded in 2022) is a Plaid for the insurance sector. It has connections with insurance portals that can be leveraged to verify insurance data (e.g. policy type, policy status, coverages, individuals or entity covered) which is key in certain use cases like getting a mortgage.
- Sunlight (Israël-based, founded in 2021) is a Plaid for the creator economy. It’s a unique API to collect data from all the platforms that are used by creators to share content or earn revenues. This API can be leveraged by 3P services which want to offer financial services to creators and want to verify identity, performance and monetization data.
- Alterya (Israël-based, founded in 2022) is a Plaid for DeFi. It’s a unique API to access to all DeFi protocols allowing to read/write data and to execute transactions.
Hero (Panama-based, founded in 2021) is a Bill.com for Latam. It helps companies manage and pay their invoices. It leverages Whatsapp to collect and categorize invoices.
Hiresure (India-based, founded in 2020) is a Pave for India. It’s a compensation benchmark SaaS to help companies close candidates by having a real-time views on the salary paid on the market. Hiresure is integrated in HR and payroll systems avoiding manual entry.
Bridgecard (Nigeria-based, founded in 2021) is a Marqeta for Africa. It provides a card issuing platform for virtual and physical cards in countries like Nigeria, Ghana, Kenya or Uganda.

Ecommerce

There are 2 main e-commerce trends in this batch: (i) e-commerce enablers empowering merchants/marketplaces to generate more revenues and/or more profits (e.g. around returns & pricing) and (ii) social-first e-commerce platforms.

Rever (Spain-based, founded in 2022) is an e-commerce enabler to smoothen the return process for both consumers and brands. It builds customised return portals that are super easy to use for consumers who can quickly select the items they want to return, how they want to return them and how they want to be compensated.
Polymer (US-based, founded in 2022) is a pricing optimisation platform for e-commerce. Merchants or marketplaces will set-up an experiment with products and prices to be tested. A virtual marketplace will be generated and Polymer will analyse usage patterns of real consumers to see their reactions to different pricing levels.
Jamble (France-based, founded in 2021) is a mobile-first C2C fashion resale marketplace based on live-streaming and short videos. It empowers sellers with unique tools to sell their items via video which is a medium that has a higher conversion rate compared to traditional listings.

Consumer

Relay (US-based, founded in 2021) is a subscription based mobile app with group chats to overcome addictions (e.g. drinking or smoking).
Metriport (US based, founded in 2021) is a subscription based mobile app to track anything related to your life (mood, habits, finance, periods, mindfulness, journaling, fitness, nutrition, etc.) and to discover patterns between these data thanks to machine learning.
Roforco (US based, founded in 2021) is a gaming publisher on the Roblox platform. It partners with developers to help them in their journey from ideation to prototype and full-scale on Roblox.

Vertical Solutions for IRL Entrepreneurs

Vertical solutions for IRL entrepreneurs are SaaS, marketplaces and fintechs targeting offline entrepreneurs (construction companies, restaurants, doctors, hairdressers, etc.) with a product specifically targeting the vertical in which they operate.

Boostly (US-based, founded in 2017) is a vertical SaaS for restaurant to automate text marketing and feedback collection. It generates $1m in ARR with sales driven via outbound sales. It’s a great solution for restaurants to collect data on their customer base and to leverage this data to increase repeat (e.g. with weekly offers or birthday deals).
Garage Mobility (Ghana-based, founded in 2021) is a B2B auto-parts marketplace between parts distributors/manufacturers and retailers. In Africa, it’s a extremely intermediated market and retailers struggle to get access to working capital financing.
Ciro (US-based, founded in 2022) is a database of SMBs and local businesses to help vertical SaaS deploy their go to market strategy starting with 3 verticals that are dental, medical and construction.
Materee (Indonesia-based, founded in 2022) is a B2B marketplace for construction materials procurement. It sells to contractors and construction material stores. It offers real-time stock availability and pricing but also delivery tracking and financing.
Bunting Labs (US-based, founded in 2022) is a vertical SaaS for manufacturing companies to manage their inventory.
Albiware (US-based, founded in 2020) is an all-in-one vertical SaaS for property insurance repair contractors managing all aspects of their business (CRM, project management, field documentation, scheduling, BI, marketing automation, etc.).

Finance

Several fintech themes emerge from this batch: (i) verticalised neobanks (e.g. African communities, trucking companies, freight carriers, freelancers, couples), (ii) crypto projects (e.g. on-ramping/off-ramping, wallets, DeFi), (iii) BNPL (B2B BNPL or BNPL in emerging markets), (iv) AR/AP automation platforms and (v) compliance (web3 background checks, KYC orchestration).

Tranch (UK-based, founded in 2021) is a B2B BNPL solution to enable suppliers to offer flexible financing terms to their customers (3-12 months to be compared with 30-90 days for invoice financing). It’s a good solution to increase your cashflow by being paid upfront while providing a great experience to your customers who can spread the cost on their own terms.
Tank (US-based, founded in 2022) is a verticalized neo-bank for trucking companies. Trucking is a low-margin business and trucking companies are paid on a 30 to 90 days payment terms. To get the cash upfront, trucking companies do factoring which is extremely expensive (2-5% fee and $40 per wire). Tank is building a neo-bank for trucking companies starting with an invoicing product that is cheaper and faster than existing solutions. It plans to expand into new areas like payroll, expense management, insurance or P2P payments.
Moneco (France-based, founded in 2022) is a verticalised neobank for African communities living in France. It reduces the friction and the cost to send money to people in Africa or to pay bills in Africa.

Climate

Bend (US-based, founded in 2022) is an API to get access to spend-based CO2 emissions estimates. Its API can be used in several use cases: (i) companies wanting to measure their carbon footprint by connecting Bend to their bank account, (ii) fintechs wanting to embed climate solutions into their products and (iii) procurement departments wanting to decarbonize their supply chain.
Hedhehog (US-based, founded in 2022) is building automatised farms to grow mushrooms for 1/3 the cost of alternatives. Mushrooms can be used to make our food system more sustainable by recycling agriculture waste into protein rich food.
Paces (US-based, founded in 2022) is a data platform to analyse land parcels to evaluate if it makes sense to build a renewable energy project (e.g. solar, wind or hydrogen plant). It looks at the energy generation potential of the parcel but also at what does it take to connect the future plant to the grid.
Evoly (Switzerland-based, founded in 2021) makes smart meters for electric, water and waste use cases. It partners with utility companies to modernise their fleet of meters at an affordable price (5x cheaper than existing solutions).

Thanks to Julia for the feedback! 🦒 Thanks for reading! See you next week for another issue! 👋

Overlooked by Alexandre Dewez