YC’s newest batch of prospects looks strong, investors say

As a devoted NBA fan, I only tune in to college basketball once a year—for March Madness—hoping to see the next big star.

And that’s what I was thinking about watching Y Combinator’s Demo Day this week. For the uninitiated, Demo Day is the culmination of YC’s twice-a-year accelerator program, where founders pitch to investors. It was my first time attending, and I joined on Zoom. Watching YC’s winter 2024 batch move through rapid-fire pitches, I thought: It’s hard to pick stars—whether that’s big men who can shoot, or future billion-dollar companies.

But there are, at least, some clues. Resumes can go a long way for one, and coming out of a major program like YC (or, in the case of basketball, Duke or Kentucky) can make a difference. At Y Combinator, the pace of Demo Day helps prepare founders for high-speed startup life, said Initialized Capital managing partner and YC alum Brett Gibson.

“Have you ever seen Arrested Development?” Gibson asked me, going on to reference a scene where wayward Gob, played by Will Arnett, forcefully tells a full boardroom: “Two weeks! Let’s do it in two weeks!”

“It always occurs to me that that’s actually the right advice…It's not how fast you go necessarily, but that it’s compounding to apply that lens to what you do,” said Gibson, adding that, without any preparation, it can be especially hard to come to grips with the velocity of startup life.

Demo Days also set founders up to work on a skill they’ve probably never spent much time on—pitching to lots of people, said Caroline Winnett, executive director of the Berkeley SkyDeck, which has its own Demo Day on April 10.

“You get very little practice in your life for public speaking,” Winnett told Term Sheet. "You have to go to Demo Day with that pitch nailed, absolutely nailed, but with the knowledge that people don’t remember what you said. They just remember how you made them feel.”

Some investors said they were particularly impressed this year. “The overall quality of teams and ideas is quite high and arguably better than the recent batches,” Wing VC partner Tanay Jaipuria told Term Sheet via email.

Both Jaipuria and Canvas Ventures general partner Mike Ghaffary saw some promising AI entrants. (About 50% of this batch is working with AI, according to YC.)

But it’s not all about LLMs anymore, Ghaffary distinguished, and consumer AI was a key trend in this batch especially.

“Founders have obviously moved on from trying to reinvent the wheel on foundational models, but they clearly see two trends in the opportunity set: 1) infrastructure to connect LLMs to the rest of the software ecosystem, 2) applications of AI to verticals like healthcare and consumer,” he said in a note to Fortune.

Some AI-related names from Demo Day I’ve heard getting buzz include AI-powered and insurance-focused Arcimus, and music generator Soundry AI. One of my personal favorite pitches came from Hemingway, which is applying AI to receptionists' tasks in dental offices—they said they had $60,000 in annual recurring revenue, and are already in ten practices. (One investor told me that there’s a hierarchy of metrics in Demo Day pitches, and ARR and growth rate are at the top of the food chain.)

But it’s also spectacularly early in the game for any of these metrics, and plenty of factors will ultimately determine who the superstars from this class will be.

See you Monday,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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This story was originally featured on Fortune.com