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The 9 types of startups Y Combinator thinks the world needs in 2018

Posted in Business on 7th Mar, 2018 05:43 AM by Alex Muller

Every year, thousands of startup founders apply to Y Combinator in the hope that their company will be funded and join the ranks of YC alumni like Dropbox, Airbnb, Stripe, Instacart and reddit. Through the application process, YC gets to see what the smartest people are thinking about.


Y Combinator: 


Since 2005, we’ve funded over 1,500 companies, which are now collectively valued at over $85 billion. Many of the best ideas we’ve funded were ones that surprised us. For example, when Airbnb applied to Y Combinator in fall 2008, the idea of renting and sleeping on an air mattress in someone else’s house was unappealing to many, and it’s one we wouldn’t have thought of ourselves.


Yet, there are always startup ideas that we hope more founders will come to us with. Every year or so, the partners at YC take time to write down these ideas and publish a list called the Request for Startups (RFS). These are concepts we believe will be important in the coming decades. Our most recent RFS lists 25 ideas, including nine new ones we added this month.


Here is a rundown of those nine ideas we’d like to fund in the coming year:


Brick and mortar 2.0

We are interested in seeing startups that use brick-and-mortar commercial or retail space in interesting and efficient ways.

Amazon is putting malls and big-box stores out of business. Rather than fighting a losing battle with Amazon, brands need to rethink how to use retail space in ways that play to their strengths. Tesla, Warby Parker, and Peloton use brick-and-mortar locations as showrooms that complement their online sales channels. Without the need to store inventory, retail space can be used much more efficiently.

Interesting uses of brick-and-mortar space are not limited to retail stores: Similar sea changes are happening to restaurants, entertainment venues, local service providers, and office buildings. New businesses will be purpose-built for customers who are trained to expect features like online ordering, deep integrations with other services, and immediate delivery. Flexibility is key: For instance, it is likely that rather than multi-year leases, businesses of the future will utilize “micro-leases” that last days or even hours.


Carbon-removal technologies

The Paris Agreement set forth a global goal to limit the earth’s temperature increase to 1.5 degrees Celsius this century. Just switching to renewables isn’t going to be enough to reach that goal—we will also have to remove carbon from the atmosphere.

Carbon removal and sequestration technologies are still in their infancy. The current solutions can be divided into two groups: natural (such as reforestation and biochar) and technological (such as direct air capture). Two challenges with direct air capture are costs and scale. Several countries (including the US) recently stepped up and created financial incentives for removing carbon from the atmosphere, but it is not yet cost effective with current technology.


Cellular agriculture and clean meat

Recent scientific developments have changed the way we think about producing protein. We can now produce food that is scientifically indistinguishable from animal products like meat and dairy, using only cells and not harming any animals.

Today humans use farm animals mostly for meat and dairy production. Whether or not you believe this is cruel and wasteful, we all know it’s not sustainable. Most of the available farmland in our world is already being used for meat production, so there is no more room for expansion as populations grow. The global greenhouse-gas emissions from agriculture are larger than the share of carbon emissions from transportation, and the use of antibiotics in farming is a real danger to our own health system.


Cleaner commodities

At current rates of deforestation, there will be no rainforests in 100 years. There are many environmental reasons for why this is bad, but it will also be problematic for the industries relying on these increasingly scarce resources.

Startups have already started to address the need for cleaner consumer products, but industrial commodities like palm oil and soy are getting less attention.

For example, palm oil is the most used vegetable oil in the world: It’s in about 50% of grocery-store products. In 2016, the global palm-oil market was valued at over $65 billion and it’s expected to reach $92.84 billion by 2021. Palm-oil production tends to rely on crude, environmentally destructive slash/burn methods, exploitative labor practices, and contributes the most global-warming emissions of any commodity aside from beef.

We think these big market/low-tech industries could be interesting to go after. Examples of startups we’d like to see apply are those working on synthetics, cleaner alternatives, or supply-chain improvements. Price point will likely be very important here, more so than for consumer products. It would also be great if new jobs are created or if the solution involves reforesting.


Improving memory

Human memory is too volatile. Compared with computers, humans have an odd memory system: We can recall subtle emotions and feelings from 10 years ago while simultaneously forgetting where our phone is and what to pick up at the store. The increasing bombardment of information and ideas certainly does not make it easier, nor do age-onset diseases like dementia and Alzheimer’s.

Some simple solutions like voice assistants and wearables may help supplement short-term memory; more complex approaches involve neural interfaces, but raise new UX problems. We want to fund startups that are exploring how to improve human memory with technology. Ideally we can solve Mitch Hedberg’s problem once and for all.

Longevity and anti-aging

We’re looking to fund early-stage life-science companies that are still in the lab phase. The first area we’re going to focus on is healthspan and age-related disease. We think there’s an enormous opportunity to help people live healthier for longer, and that it could be one of the best ways to address our health-care crisis.


Safeguards against fake video

Fake videos are on the rise. The tech to create doctored videos that are indistinguishable from reality now exists, and soon it will be widely available to anyone with a smartphone.

We are interested in funding tech that will equip the public with the tools they need to identify fake video and audio.


Supporting creators


The internet has made it easy to distribute creative work to millions of people, but no one has figured out how to help creatives make a sustainable living.

In the arts, there is an army of middle men that exist between the artist and the fan. Each person in the middle—producers, managers, gallerists, ticket sales reps—takes a cut of each dollar made by the artist. We want to see more startups that are building a direct pipeline from artist to fan. We believe there are ways to build more creator-friendly platforms, and we’re interested in seeing projects that make it easier for artists to raise funding, track consumption of their work, and prevent piracy.


Voice apps

Tens of millions of households have smart speakers. We are interested in figuring out which voice apps will deliver the most value on this new platform.

Voice applications are very different from typical web/mobile applications, so we think creating products that engage and retain users will require a lot of innovation. Voice-app companies who participate in YC will have a direct channel to the Amazon Alexa and Google Assistant teams.

Tags: Y Combinatorstartuptechentrepreneurshipbusiness

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