"AI Startups" are over done (finally)

Y Combinator's Summer 2025 batch shows a significant shift away from generic AI startups toward companies that deeply understand their target industries. Instead of developers building AI tools for unfamiliar domains, successful companies now combine deep domain expertise with AI capabilities. Examples include Nautilus (car wash platform by someone who worked in car washes since age 16) and co-create (video tools by actual video editors). This trend reflects higher acceptance standards and better investment outcomes, with domain experts learning AI rather than AI experts trying to understand new industries.