The Great AI Reset

What the data shows about who is building, where capital is moving, and how the cycle is shifting

AI has turned the startup world into a pressure cooker.
Founders are younger. Markets are volatile. Investors are cautious.
But behind the noise, the data tells a story of acceleration, consolidation, and renewal.

1. Founders are changing

The average Y Combinator founder is now 26 years old, down from 30 just a few years ago.
More than 80 percent are engineers, and most are back in the Bay Area.
This new generation builds faster, burns less, and relies on technical leverage rather than headcount.

Average age of YC founders continues to fall, reaching around 26 in 2025. Source: Rebel Fund, “The New Y Combinator” by Jared Heyman.

Share of technical founders at Y Combinator reaches record highs above 80 percent. Source: Rebel Fund.

Over half of YC founders now graduate from top-20 universities. Source: Rebel Fund, “The New Y Combinator.”

Share of YC startups based in the San Francisco Bay Area approaches 85 percent. Source: Rebel Fund.

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2. Control is shifting to the top of the stack

Google is the only company fully integrated across the entire AI value chain, from custom chips and model training to cloud infrastructure and end-user applications.
This dominance defines the limits of competition for everyone else.
Startups now compete through focus, proprietary data, or narrow domain expertise rather than infrastructure control.

Google maintains full vertical integration across the AI stack, spanning hardware, models, and applications. Source: McKinsey, “AI Value Chain 2025.”

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3. Markets are feeling the tension

Michael Burry’s Scion Capital revealed put options on Palantir and Nvidia worth over one billion dollars combined, signaling the first major short position on AI exposure.

Scion Capital adds massive put options on Nvidia and Palantir in Q3 2025. Source: SEC 13F Filing, Scion Capital.

Meanwhile, the Nasdaq has pulled back from record highs several times this year. A drop below 21,000 would mark a more meaningful correction.

Nasdaq Composite shows repeated pullbacks from record highs in 2025, reflecting growing market volatility. Source: FT Markets / LSEG.

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4. Growth is diverging

Stripe’s data shows US startups are pulling ahead of global peers, even after removing AI companies.
American founders are adopting new technologies faster and compounding that advantage through iteration and learning.

US software startups continue to outgrow European and UK peers, driven by faster adoption of AI and fintech tools. Source: Stripe, “Startup Revenue Index 2025.”

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5. Efficiency comes with a cost

Layoffs in October reached the highest level for that month since 2003, led by the technology and warehousing sectors.
AI-driven productivity gains are reshaping employment and creating pressure for large organizations to operate with smaller teams.

US companies announced the highest October layoffs since 2003, signaling structural labor adjustments. Source: Challenger, Gray & Christmas (2025).

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6. San Francisco is alive again

After years of remote work, San Francisco’s office demand has surged 60 percent quarter-over-quarter and now sits above pre-pandemic levels.
The rebound is being driven by AI companies, research labs, and infrastructure startups returning to collaborate in person.

Among major US cities, San Francisco records the fastest rebound in office leasing activity. Source: a16z, “Tech x SF Report 2025.”

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The takeaway

Across all of these datasets, a consistent pattern emerges. Founders are younger and more technical. The AI stack is concentrating in the hands of a few global players. Markets are shifting from optimism to realism. Growth is accelerating in the United States while the labor market adjusts. And the Bay Area, once written off, is buzzing again.

The Great AI Reset is not a downturn. It is the moment when the noise clears and the builders who can create lasting value step forward.