As discussions of India achieving 100 AI unicorns in the next decade continue, it’s interesting to note that investors betting on these startups are increasingly emerging from the far West, with Y-Combinator playing a crucial role for many of them.
Bullish on India
Y Combinator is one of the world’s largest startup accelerators. Sam Altman’s first venture Loopt was also accepted into the YC program in 2011.
As of early 2024, YC has funded over 4,500 startups with a combined valuation of more than $600 billion, making it an attractive lifeline for many emerging startup founders.
For the YC W24 program, 260 companies were selected from over 27000 applications. “With an acceptance rate under 1%, this was one of the most selective cohorts in YC history,” said Garry Tan, President & CEO of Y Combinator.
According to the demographics of YC’s 2024 winter batch, selected founders were 36% white, followed by 25% Asian and 18% South Asian.
YC also experienced a notable 45% rise in applications from India between the Winter 2020 and the Winter 2022 batches. This year also saw a number of Indian startups selected for the program.
Usually held in two batches of three-month programs, summer and winter batches, YC helps early-stage startups rapidly grow and succeed by providing seed funding, mentorship, access to a vast network of industry experts among many other things.
Going by the previous track record, YC has witnessed impressive growth from a number of their Indian startup investments. The notable one being that of online grocery platform, Zepto. Not just the seed funding rounds, but the accelerator was part of their growth rounds too.
“They were constantly in touch with us and said, hey, you guys are growing really fast and you’re now getting to millions of dollars in sales. Why don’t you talk to the growth folks at YC,” said Aadit Palicha, co-founder and CEO of Zepto in an interview last year. The discussion paved the way to a Series-C round of funding of $100 million, which was led by YC.
Not just Zepto, but other Indian startups that have hit unicorn status, including Meesho, Razorpay, and Groww, have all been YC-backed.
Unique Structure Advantage
Y Combinator’s unique accelerator program gives them an added advantage in the future too. YC invests $500,000 in a startup, out of which, $125,000 gives YC a 7% ownership of the startup. The remaining $375,000 comes under a special agreement which allows YC to convert it to shares when the startup raises more money.
The program also gives YC the right to invest in future rounds of financing for the startups. With such a structure in place, taking bets on promising Indian startups is only going to be a win for the Silicon Valley-based startup accelerator in the long run.
India AI is the Central Theme
Garry Tan, President and CEO of Y Combinator. Source: Getty Images
“Many of the companies in this batch, at least 50%, are building around AI in one form or another,” said Tan, referring to the current batch of the YC program. Interestingly, the Indian founders are also building in the AI bucket.
AIM got the opportunity to speak to a few of the Indian startup founders that were part of the 2024 program. Interestingly, we spoke to a couple of these promising startup folks much before they were YC-inducted.
The creator of AI software engineer Devika, Mufeed VH who founded Stition.AI is now part of YC S24 batch. His startup works around AI cybersecurity for fixing security vulnerabilities in codebases, and is now renamed to Asterisk, a probable YC guidance for better branding.
Arko Chattopadhyay, founder of Xylem AI, now renamed to Pipeshift AI, was part of the current YC batch. The startup is a cloud platform for fine-tuning and running open-source LLMs, designed to help teams deploy their LLMs into production quickly.
A Bengaluru-based startup is also part of the accelerator cohort. Ragas, co-founded by Shahul ES and Jithin James, is building an open-source stand for evaluation of RAG-based applications.
On the agentic front, Indian co-founders Sudipta Biswas and Sarthak Shrivastava are building AI employees through their startup FloWorks.
On a mission to reduce Saas expenditures with generative AI, YC-backed Indian founder Prasanna Naik is building CloudEagle. Similarly, to boost Saas sales, Mica AI was co-founded by Achyuta Iyengar, Jai Yarlagadda, and Bharadwaj Swaminathan.
CodeAnt AI and GuardianAI are a couple of AI startups in devops and healthcare space, with Indian origin founders.
Encouraging for Indian Founders
While YC will be at an advantage by investing in startups that will potentially hit millions of dollars, the YC programs are equally enticing for the Indian founders too. With no requirement on formal degree or actual returns, YC simply bets on a founder and their idea.
Additionally, the ease of growing one’s business through the YC route is well simplified with the accelerator even giving assistance on changing a startup’s country of incorporation.
The startup founders receive not only immediate funding but also comprehensive support from the entire YC ecosystem, including guidance from prominent figures such as Sam Altman, Paul Graham, Jessica Livingston, among others.
Interestingly, for the first time, YC is also planning to start a new Fall batch to keep up with the influx of ideas and developments that is happening in the AI field.
Source: X
With history showing the majority of YC-backed Indian companies growing phenomenally, the YC craze for Indian founders—and vice versa—will only continue to grow.
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