A Y Combinator startup named PearAI launched with an X post thread and YouTube video on Saturday and created immediate controversy. And some of that is splashing onto YC itself.

PearAI offers an AI coding editor. The startup’s founder Duke Pan has openly said that it’s a cloned copy of another project, VSCode, and another AI editor called Continue, which was covered under the Apache open source license. But PearAI made a major misstep: PearAI originally slapped its own made-up closed license on its project, called the Pear Enterprise License, which Pan admitted was written by ChatGPT.

Changing a license like this is a big deal in the open source world. Not only are there legalities involved in violating a software license, but it defeats the whole purpose of open source, which is about community building, sharing, and contributing. In an apology PearAI’s Pan posted on Monday, he said that the project has now been released under the same Apache open source license as the original project.

The launch thread went viral with thousands of comments by Sunday. Some were congratulatory, but others were vicious in pointing out the licensing and the fact that PearAI wasn’t so much a fork with new stuff added, but a replica with a new name. Pan admitted as much in his apology.

So many angry comments were made on Pan’s launch thread that X put a community note on it that read: “Pear is a fork of Continue.dev, an open-source AI code editor. PearAI used Continue.dev’s code and mass-replaced all references to ‘Continue’ to ‘PearAI’ to mislead people into believing that they built this product on their own.”

This note wasn’t accurate, either. PearAI did say in some of its materials that the project was a clone (also known as a fork) of Continue as well as the original project that Continued used, VSCode. X subsequently removed that note.

Pan apologized for how hard it was to find that information, too. He said that one way he and his cofounder, Nang Ang, “screwed up, critically, was not being clear enough about this … doing so upon a fork of others’ work without many new features, and talking about it so publicly online, made it look like we were stealing the work of others as our own.” In a comment to TechCrunch, he pointed out, however, that PearAI did have a list of differentiating features from Continue, which it has listed in a FAQ document.

Still, on Sunday, Continue jumped in by posting a subtle threat that it was “ecstatic to see the ecosystem that has formed around us. But open source can’t be taken for granted—it is a movement built on trust, and on respect for contributions, licenses, and intellectual property.”

Y Combinator CEO Garry Tan got involved, too. He defended PearAI with several tweets. “Don’t understand why people are dragging a new project when literally it’s open source Apache license and that’s *the reason* why open source is awesome” one read. As you might imagine, people pointed out that it was changed to an Apache license after the uproar.

There were other reasons this project caught ire. Pan boasted how he “just quit my 270 000$ job at Coinbase” to do this startup, even though this was about as far from an original idea as a startup can get. In addition to Continue, another big competitor is Cursor. 

On top of that, YC has funded two other AI code editors already, Void and Melty, as the mob was quick to point out. To which Tan replied on X, “More choice is good, people building is good, if you don’t like it don’t use it.”

Others criticized YC for selecting PearAI into its cohort at all. Blogger Sven Schnieders wrote that PearAI is an example of the “the decline of YC” because it accepted a company that is “nothing more than a codebase copied from another YC-backed company.”

On Hacker News, the site for programmers owned by YC, a commenter wrote that the debacle “says more about YC than this particular founder (lots of these types nowadays): i.e. their process, their due diligence.” Another wrote, “Is it typical for VC to just throw money at projects without any sort of oversight/auditing of, oh jeez, IDK, Licensing/Legal issues?”

YC’s plans to double from two cohorts a year to four isn’t likely to ease this perception, or this risk, but the whole uproar probably says as much about how eager all VCs are to fund AI startups as it does about YC’s love of this particular ilk of them.

Tan could not be immediately reached for comment.

Edit note: This story was updated with a comment from PearAI and to include another mention that the project was a fork of VSCode as well as a fork of Continue.