Reflections from YC Demo Day W25

Last week, our Partner Andrej Petrus attended the Y Combinator DemoDay in San Francisco’s Palace of Fine Arts. Great venue choice – celebrating entrepreneurship as a form of art?

Y-combinator celebrated its 20th year of operation, having created over $800B in new startup market value since inception. That’s quite something! A very important player in the early stage venture capital and a great barometer of what is hot and what is not in tech right now.

ZAKA VC has 8 YC companies in portfolio and also partnered with Pioneer Fund investing primarily into YC Start-ups.

And what is hot and what not? For future founders thinking about what to build next, we recommend checking the Request for Startups by YC published regularly with an overview of what use-cases/technologies/sectors might have their momentum right now. Where and what to build.

Here are Andrej‘s Reflections from YC Demo Day W25:

🚀 Autonomous AI Agents are here, here to stay, and poised to take over most jobs… and there’s nothing we can do about it. It hits really hard once you fully imagine what is coming.

❌ Not once did I hear the word SaaS (although the business model is still in place for many).

💡 More than 50% of the startups were focused on AI Agents and AI Infrastructure. It’s starting to feel like “AI agent for X” is the new “Uber for X.” But this AI Agent craze isn’t just hype—it’s delivering real value, fast. And the whole space is drastically evolving from one week to another, hard to keep-up with all news. MCPs and Manus just from last week.

🧠 AI Agent-to-AI Agent infrastructure needs to be built as well.

💰 Valuations have jumped to $20M caps, with some even hitting $50-60M. But there’s a noticeable split in fundraising momentum—some startups were oversubscribed, while others struggled with high valuations.

🤖 A quarter of the W25 batch has 95% of their codebase generated by AI. This is no longer the future—it’s the present. With AI, teams are moving much faster to a finished product and first sales, requiring less capital and smaller teams.

💻 “Vibe coding” seems to be the new preferred way of coding. Engineers becoming product people and systems thinkers. Thinking and reviewing -> 10x Engineering.

💥 Startups are showing surprising traction—reaching $500K to $1M ARR in just weeks or a couple of months. This was hardly achievable couple of years ago.

🏢 Even enterprise startups are hitting initial traction faster than ever. Enterprises are eager to adapt to the AI wave 🌊 before it’s too late, opening the door for partnerships with new AI teams.

⚙️ Hard-tech, hardware, robotics, spacetech, and biotech made strong showings. Think: fusion, semiconductors, pesticides, road robots, agro robots… the future is now.

⚙️ Still, I feel we need push for innovation on the atoms level more.

💼 Small, agile teams are the new normal. With AI, there’s no need for massive headcounts to scale.