I'm a generative AI startup founder who got into Y Combinator this year. But I turned them down for Neo, another smaller accelerator program. Here's why.

• I'm the cofounder and CEO of Aragon AI. I previously applied to Y Combinator and got rejected.
• But this year, I was accepted with a new idea, but also got into another startup accelerator, Neo.

This is an as-told-to essay based on an interview with Wesley Tian, the cofounder and CEO of Aragon AI. The following has been edited for length and clarity.

I first met my cofounder while working at the Y Combinator-backed company Virtually. We also worked at another YC company, Fractional, after that too. We decided we wanted to start a company together and started Aragon AI last October and applied to Y Combinator for its winter batch this year.

At first, we were working on a few different ideas unrelated to AI, and sometime around between applying to YC and the interview, this new AI technology came out. I thought, you know, this is my chance to innovate and take this technology to deliver a new solution for people's problems. So we changed ideas, and I think YC was maybe not too happy about that. They ultimately didn't end up accepting us, so we decided to pivot.

Initially we launched this AI avatars product. I think one of the first use cases was to use this model to generate cool images in different art styles. We had a bunch of different packs, like a LinkedIn pack or an anime pack, to make people look like these different characters. Based on feedback from our customers, the LinkedIn pack hit the spot, and so we decided to double down on that.

Eventually, we moved on to build out this product that takes just 10 to 20 images of people's faces, and then we create this AI headshot model of them. And with that model, we're able to generate these photos that are indistinguishable from real photographs. So, instead of having to go to a photography studio in person and spend hundreds of dollars, buying a suit or a blouse and doing your makeup and then smiling awkwardly for an hour for a professional photo shoot, you can actually do it from the comfort of your own couch now.

Y Combinator vs. Neo

In the spring, we decided to reapply to Y Combinator. But I had some friends in the Neo network who told me more about Neo and I ended up applying to that program too. We got accepted into Neo first, and I was incredibly excited. I still remember the moment when Neo accepted us because Neo was the first time a VC really wanted to invest in us. Ali Partovi, the CEO of Neo, told us over a call that he really liked us and was very impressed with how scrappy we were, and that we reminded him of his younger self. That validation that our idea is good and that they liked us as a team felt amazing. It was probably one of the happiest moments of my life to be honest.

And then, after Neo, we talked to YC and interviewed and then also got an offer from them. We just thought, wow, this is just like another dream come true.

So we started talking to a bunch of investors in Silicon Valley and other founders who went through both experiences, and ultimately, we just felt like Neo's was a better fit for us for a number of reasons.

Neo's batch size is a lot smaller than YC's. I do think YC, outside of Silicon Valley, is still a bigger name, and there's a huge number of unicorns that have come out of there. But, their batches are quite big. There's more people you can meet but it's maybe not as intimate.

Neo also has an Oregon retreat, which I felt was a really unique experience. You get flown up to Oregon at this resort, and you live with your other 20 batch-mates for an entire month, and mentors come in to speak. For me, this process is not just about building a business, but also building something meaningful while enjoying the experience, so the idea of the retreat was really exciting for me.

While YC is famous for its network, Neo does also have a really good network. Reid Hoffman flew in last year to visit the founders and spend one-on-one time with them, for example. And our mentor at Neo is Erik Goldman, the cofounder of Vanta, and we get to meet with him every week.

If you're a B2B company, YC is probably a better buy, because YC's network can be great for finding new customers. But since we're a B2C company, we wouldn't have had that same benefit.

When it comes to your terms, I think Neo's terms are objectively better in every way. YC asks for a 7% stake for $125,000, and then an additional $375,000 uncapped. Neo's terms are $125,000 for a 2.5% stake at a $5 million post-money valuation, with an additional $500,000 uncapped safe. Additionally, you take an equity stake in the entire fund, which I think is really unique, because it further incentivizes you to help out other people in Neo.

Since starting Neo, I think the experience has been better than I expected. The mentors have been really good and they offer a lot of guidance. And it's great to be building something with other peers as well.

I'd honestly say the decision between the two is a personal choice. So everyone should probably look at themselves and their team and decide which is a better fit for them.