The disconnect between Y Combinator Demo Day and due diligence

techcrunch.com

17 points·ganeshkrishnan··4 comments

What I've alays found strange is that it the importance of "choosing the right investor" is regularly thrown around, but where or how does that happen in a demo day type experience.

I'm somewhat assuming that the best companies have already lined up the right investors for their business before demo day, and perhaps use demo day frenzy to drive the size of the round, but what does this do to the trust with the investor as well?

Specific to YC, I suspect investors have the trust that YC has done the diligence over the previous months, and that they aren't going to put their stamp on a team they know to have issues. It's bad for the YC brand long-term.

Not saying that YC hasn't invested in companies that have had issues, but they are not knowingly putting those companies up as solid YC investments. Companies get kicked out of YC for ethics and other violations.

Commenting from my non YC founder account, a company in our batch lied about revenue numbers and was unceremoniously dropped. No demo day, strong negative background check. So yes, demo day means something due diligence wise even beyond the initial stamp of approval.

It's not just institutional "investors" at risk of being lured in by the YC brand value.

I tried to post this to HackerNews earlier, but there is also a questionable-at-best kickstarter campaign going on right now by a YC startup (https://www.indiehackers.com/post/a-ycombinator-backed-kicks...), I really hope YC is on board with this startup launching it and if not will take action to protect this trust.

Techcrunch uses nasty DNS fiddling to allow tracking across domains. It should be avoided.

It goes through https://guce.advertising.com/ on click.

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