YC W23 startup CodeParrot, which built developer tools using large language models (LLMs) to convert Figma designs into production-ready code, is shutting down.
Cofounder Vedant Agarwala announced the closure in a LinkedIn post on Wednesday after two and a half years of building, pivoting, and experimenting with AI-driven developer tooling.
The startup, founded by Agarwala and Royal Jain in 2022, had raised $500,000 and gained early traction with a VS Code extension that translated Figma designs and screenshots into React, Flutter, and HTML code.
Part of the Winter 2023 Y Combinator batch, the team built and shipped multiple versions of the product but struggled to find sustainable growth. Agarwala noted that they reached $1,500 in monthly recurring revenue after their final pivot but chose to shut down rather than continue with limited runway.
“We didn’t raise on Demo Day. We spent the next year stuck in pivot hell, searching for what our company really wanted to be,” Agarwala wrote. “We hired and, painfully, had to let go of both the engineers.”
The company’s experience reflects the broader challenges many AI startups face as they attempt to commercialise cutting-edge tech in a fast-moving market.
Despite the outcome, Agarwala highlighted two moments that stood out — getting into Y Combinator and seeing the first revenue hit their Stripe account. “Those milestones kept us going when everything else was uncertain,” he said.
He added that the team had learned valuable lessons about working with LLMs, especially the importance of building robust evaluation systems over relying solely on prompt engineering. “Good prompts get you 90% there, but good evals are what really matter,” he said.
Agarwala is currently on a short sabbatical, but said his interest in AI and LLMs remains strong. He plans to help other Y Combinator startups build production-ready AI applications while exploring new ideas and searching for a potential cofounder. “I’m walking away with hard-earned lessons, gratitude, and the fire to try again,” he wrote.
Founded across Bengaluru and San Francisco, CodeParrot was one of several companies trying to automate frontend development workflows using generative AI. Its shutdown adds to the growing list of early AI startups that have struggled to convert technical breakthroughs into sustainable businesses.
Most recently, Vishnu Ramesh, founder of Subtl.ai, posted a heartbreaking message on LinkedIn, signalling the end of the road for the company. “TL;DR: we have started shutting down Subtl.ai,” he wrote.
