First, some housekeeping: Thanks to our new corporate parents, TechCrunch has the day off tomorrow, so consider this the last chapter of The Exchange for this week. (The newsletter will go out Saturday as always.) Also, Alex is off next week. Anna is taking on next week’s newsletter and may have a column or two on deck as well.
But before we slow down for a few days, let’s chat about the most recent Y Combinator Demo Day in thematic detail.
If you caught the last few Equity episodes, some of this will be familiar, but we wanted to put a flag in the ground for later reference as we cover startups for the rest of the year.
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What follows is a roundup of trends among Y Combinator startups and how they squared with our expectations.
A big thanks to the TechCrunch crew who covered the startup deluge live, and Natasha and Christine for helping build out our notes during our last few Twitter Spaces. Let’s talk trends!
More than expected
In a group of nearly 400 startups, you might think it’d be hard to find a category that felt overrepresented, but we’ve managed.
To start, we were surprised by the sheer number of startups in the cohort that were pursuing software models that incorporated no-code and low-code techniques. We expected some, surely, but not the nearly 20 that we compiled this morning.
Startups in the YC batch are building no-code and low-code tools to help developers build faster internal workflows (Tantl), build branded real estate portals (Noloco), sync data between other no-code tools (Whalesync), automate HR (Zazos), and more. Also in the mix were BrightReps, Beau, Alchemy, Hyperseed, Enso, HitPay, Whaly, Muse, Abstra, Lago, Inai and Breadcrumbs.io.
At least 18 companies in the group name-dropped no- and low-code in their pitches. They are taking on a host of industries, from finance and real estate to sales and HR. In short, no- and low-code tools are cropping up in what feels like every sector. It appears that the startup world has decided that helping non-developers build their own tools, workflows and apps is a trend here to stay.
Another group that felt — happily — overrepresented in the mix compared to our expectations was space-focused startups. When we think about early-stage startups, we tend to imagine a few folks sitting in a small office, building something that consumers or business customers here on Earth might tinker with, test out, and perhaps adopt or deploy.
But some startups dream a bit higher, looking to the stars, or at least low-Earth orbit, for inspiration. Space is not a new Y Combinator category; TechCrunch covered Albedo Space from the earlier 2021 Y Combinator batch. But to see as many startups as we did focused on the business of space was a fun surprise.
Turion Space wants to clear the junk out of Earth’s orbit, a huge task that has a total addressable market literally larger than the planet. Epsilon3 is building software for spacecraft launches. HEO Robotics wants to leverage underutilized satellite time to find objects in orbit that individuals or companies might not be aware of. TransAstra Corporation wants to build space tugs and has some neat engine tech heating up. Inversion Space wants to work on bringing things back from orbit safely, which makes sense given the sheer number of launch companies in the market today (another bullish sign for space tech).
As much as expected
If we’re going to list startup groups that made more appearances than we expected and those that made fewer, it seems only fair to note that some categories of startup activity simply met our expectations in terms of popularity.
One such category was dark stores and dark kitchens. The on-demand delivery world was born by connecting delivery networks to existing businesses, like restaurants. But leaning on food prepared by others or goods stored in someone else’s store means that delivery companies have to interface with externals — and perhaps lose some margin in the process.
Enter dark stores and kitchens. Essentially, the gambit is to create restaurants and warehouses full of what end customers want, eliminating the third-party business in the middle. It takes the storage of candy bars and booze and the cooking of spaghetti bolognese in-house.
From the cohort, Cache is in the delivery game for convenience goods, providing dark stores to hand off items to drivers. Nino Foods is building cloud kitchens in India, including pizza and burger joints feeding hungry consumers in Mumbai. MadEats is taking the ghost kitchen model to the Philippines. Byte Kitchen wants to prepare food from top restaurants in ghost kitchens, a model we’d like to try before we endorse. And FastFarma is building what we think is something akin to dark pharmacies promising 30-minute deliveries.
We expected to see some of this activity, given the huge gains that on-demand delivery startups have enjoyed during the pandemic, and what we observed met our expectations.
What else felt just about right, frequencywise? Grocery delivery in various forms. TechCrunch has covered the rise in so-called “instant” grocery delivery around Europe and has made note of startups in the United States like Instacart that have made grocery delivery part of daily culture.
So it was not a shock to see Kitchenful working on the delivery of recipe ingredients or Perfekto building what it described as “Imperfect Foods for Latin America,” or Membo offering next-day delivery of high-end grocery goods. And there was Yummy, which seems to fit into the food delivery space, but also appears to handle consumer packaged goods, among other items. We could slot Yummy into a few different categories, frankly, but it fits as well here as any other place.
Less than expected
And then there were the startup groups that surprised us by not showing up as often as we expected.
Let’s start with crypto. There were some, to be clear, but in the wake of Coinbase’s direct listing and proof that there is enough fiat to be made to take crypto-focused companies public, we expected more. Perhaps the theme of investors hoping to fund the next Coinbase is already played out, and crypto-focused startups are funding one another with cryptocurrencies?
Regardless, Coinfeeds is building something like a Bloomberg for the crypto market. We want to play with it, frankly. Dime is in the NFT game, where it’s building a marketplace that allows for the purchase of digital assets with fiat funds. That’s a great on-ramp to the crypto world. Coinrule wants to help regulars automate their crypto trading, while Argus may help crypto exchanges handle compliance. Infina could add crypto to its Vietnam-focused trading platform, while Invezo wants to bundle social media and financial data together for the crypto world and Hedgehog is thinking about robo-advising in the sector. Finally, Algofi is building atop the Algorand blockchain.
Two other categories stood out as having fewer total entrants than we might have guessed. Insurtech was one. Following IPOs and SPAC-led deals for a host of U.S. neoinsurance players, along with huge rounds for insurtech marketplaces (Insurify just raised $100 million the other day!), we expected a run of insurance-focused startups.
Instead, we saw Amenli working on selling insurance online in Egypt, Brite building a tool to help employees parse employer-offered insurance options, Telivy working on SMB cyber insurance, Kodda updating the Latin American insurance market, and Covie, which can “track a customer’s insurance coverage” for services that require it. But that was it. If there had been double the volume, we would not have been surprised.
And, finally, climate. This morning, rains from a tropical storm that was once a devastating hurricane fell on New York, New Jersey and Pennsylvania, leading to record flooding. Much of the United States is on fire. Bits of it are running out of water. Other regions are enduring droughts, or, alternatively, dangerously rising sea levels. And yet there were only a few startups in the batch trying to tackle these problems.
Phykos wants to capture carbon using seaweed, which is both cool and welcome. Waterplan wants to help “industrial facilities mitigate water risk,” something that matters for everything from chip manufacturing to cloud computing. Carbonfact wants to create a carbon footprint database for everyday goods, which could help consumers be more environmentally conscious while they shop. And Heimdal takes minerals that we want out of seawater that we want, and inputs carbon that we don’t.
A good mix of worthy projects — just fewer than we anticipated.
And with that, we can close the book on our coverage of this YC batch. We’ll do it again in another half-year, with looks into other accelerators in the meantime. Have a lovely weekend, everyone.