The Silicon Valley dream is to build a tech startup that revolutionizes the commercial universe and turns its founders into billionaires. Participating in the Valley's most famed startup factory, Y Combinator, is often part of that dream. However, a deep dive into the data from all of the nearly 5,000 companies YC has backed to date reveals a surprising truth: YC startups don't have to be unique. Far from it.

YC commonly accepts startups that are building similar or nearly identical products to previous YC grads. Some of them are direct competitors; others differ slightly by targeting a new geography (Asia or Latin America), or are a subset of a larger market (point-of-sale software for bars vs. coffee shops). This approach has sparked debate among entrepreneurs and investors, with some arguing that it's beneficial to have multiple startups tackling the same problem, while others see it as a threat to innovation.

The controversy surrounding YC-backed startup PearAI, which was accused of cloning another YC product, Continue, brought this issue to the forefront. PearAI's founder essentially admitted to copying the code editor product, and the startup's founders vowed to start over from scratch. YC CEO Garry Tan defended the company, stating that "more choice is good, people building is good, if you don't like it don't use it."

Tan's stance is more than just lip service, as he has himself championed two police bodycam startups a few years apart: Flock Safety (Summer 2017 cohort) and Abel Police (Summer, 2024). Moreover, more than a dozen startups building AI code editors went through the YC program between 2022 and 2024 – some in the same batch with the same YC partner.

When asked about its propensity to back competitors, a YC spokesperson said that the organization is more interested in the founders' backgrounds than their business ideas. "YC invests in founders over ideas, focusing on individuals with the potential to build transformative companies – no matter the space they operate in. Our investment strategy focuses on backing the most promising founders with vision, resilience, and ability to execute, which is clear in our RFS process," a spokesperson told TechCrunch.

Some founders love YC's approach, citing the benefits of its cozy network, where startups often seek customers, partners, and the like. However, others dislike competition if they feel another's product mimics theirs, rather than differentiates. YC alum Bryan Onel, founder of security startup Oneleet, posted on X about his experience with this, and a few others chimed in to commiserate.

On the other hand, YC alum Nick Evans, co-founder CEO of restaurant PoS Avocado, is fine with competitors. "I think it's stupid that most investors don't invest in competing companies," Evans told TechCrunch about YC competition. "I want investors that deeply understand my business and industry. How the hell would they know anything useful if they aren’t working with similar companies? Startups don’t die by murder; they die by suicide. You are not fighting against other startups. You are fighting against people not giving a s— about your product."

Data analysis startup Deckmatch conducted the research, inspired to look at competing YC products after the PearAI controversy. Deckmatch sells product analysis data on about 8 million startups to private market participants like investors, and corporate innovation and M&A teams. The company's AlphaLens product lets customers comb through its database to find unique and similar products, build scattercharts, cluster maps, and the like.

According to the data, the current popular product categories, each with at least a dozen startups, include AI code editors, food/beverage/restaurant point of sale systems, business finance/payroll, AI sales and customer relationship management, AI meeting assistants, and AI legal assistants. Then again, several areas were popular but have been recently less so, including crypto trading platforms, ecommerce store platforms, and corporate expense cards.

The implications of YC's approach are far-reaching, and it remains to be seen how this strategy will impact the startup ecosystem in the long run. Will it lead to more innovation and competition, or stifle creativity and progress? One thing is certain – Y Combinator's willingness to back similar startups is a trend worth watching.