This. By pivoting to your business model, they are lending it validation and doing you a favour. It’s another reason for a VC to invest in your product vs theirs, as you have been at it longer.

If you really believe in yourself and your team, work hard to outcompete them. Like many others have said, unless there is something illegal about this, it is fair game.

They got rejected by YC. YC is not an investor in OPs business, they are however investors in that copycat.