Why does it matter? You are changing the financial picture, probably by an order of magnitude or more. The question should be what the company will look like after the investment, not before.
For an early stage company, nobody cares about your assets or your shit estimates of the value of your intellectual property or goodwill. But payables and receivables can definitely be a dealbreaker, and I've never known a single VC that would sign a check without an understanding of where the company, no matter how new, stands with them.
Furthermore, their interviews cut to the underlying cause (scrappiness & maker mentality), which inherently eliminated certain effects (AAA office spaces) without ever seeing a balance sheet.
There was some basic due diligence questions that us founders had to answer but very light still.
I’d assume most seed deals on SAFEs or even priced rounds are similar.
PG might not personally read balance sheets but if nobody checks them at all, it would be pretty weird.
To your point: when YC interviews companies, they are mostly very early stage and pre-revenue. What YC cares about is how much money they could make if everything goes right, and whether the team is capable of making everything go (close enough to) right over the long term. The current financial picture has minimal bearing on that. Obviously, to the extent that it does have a bearing, YC is smart/experienced enough to consider that. But again, you can glean this from a conversation better than an accounting document.
I've personally seen A-rounds fall through because of balance sheets...turns out that when you promise hundreds of thousands of dollars in future services in exchange for a little bit of present cash flow, it can drastically affect your balance sheet and prospects for future investment.
Yes, companies need to mindful of their finances and cashflows. Everyone knows that, PG included, as I conveyed in another comment.
The real point that PG is making here is that an early stage company with perfect books but no exciting product or market opportunity is dead, whereas one with incomplete bookkeeping but an incredible product and market opportunity is much more likely to be a good investment.
I've long respected PG for his role in transforming the VC industry from it's MBA-led Sand Hill Road old boys club into an engineer-led scrappy startup world. And I have enjoyed his writing even when I disagree with much of it. However, his new Twitter persona is absolutely bonkers. Not every insight needs to be contrarian to the point of negligence.
He said nothing of the sort.
The point of this tweet is just that balance sheets don't determine outcomes for early stage startups; good products and excited users do. Balance sheets matter later. Many of the teams PG invested in were not even incorporated when he invested in them.
Tax authorities, YC's due diligence team and others will want to look at it. Anyone competent enough to start a company will know this.
Interpreting this as "pg says balance sheets don't matter at all to anyone" is.... weird. Repeatedly pushing this point is weirder. Maybe take a break from the internet for an hour or two
Isn't that what a business plan is? In some sense, it's a description of what your cash flow looks like in a couple of years.
What he does read (or did, when he was still working), is the YC application form response, which is designed to glean the important information in a very succinct format.
If he likes what he reads, then he'd have a 5-10 minute conversation with the founders, and decide whether or not to invest based on that.
So, yes he wants to know what the founders' general plans are. That's very different from reading or recommending lengthy business plan documents.