Valuations after Demo Day are 10x what they used to be, and the investors who try to squeeze founders on terms are still at it. So clearly there is not, as they claim, a correct price for the startup. Clearly they start from market price, whatever it is, and push for a discount.
I worry about it and I bet the YC partners do too. But the situation is hard to manage: an n^2 problem with major FOMO on both sides. It's a recipe for turbulent flow, and I'm not optimistic it could ever be made laminar.
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Cant the n^2 + fomo problems be partly solved by having (some) startups meet investors pre-demo? That way investors can assess the inroads startups made during the program and evaluate valuation risks better. Maybe part of the investment pool can be allocated pre-demo as well...
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I miss the days when Trevor tried my homemade ebike and told me to apply to YC.
End of conversation
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One option: require that all term sheets can’t expire until one month post-demo day. Something equivalent for SAFEs over $[x]. Won’t fully solve the problem, but MIT does this for on campus recruiting offers and it meaningfully reduced the artificial decision pressure.
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I can understand how VCs might long for the good old boy days of when they had more leverage over founders... but are their any repeat founders that view any prior funding environment as better than today? I wonder if it is because interests are more aligned today than before
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Trading floors are the best places to get a physical sense of the turbulence of markets. Chicago pits, startup demo days, live auctions. The feedback loops among self, crowd, and reality (price) give rise to emergent basins of attraction outside our predictive range.
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