The disconnect between Demo Day Y Combinator and due diligence – TechCrunch

Within 48 hours, the startup world had two important events: the biggest Demo Day ever at Y Combinator, and the early exodus investor of Dispo, a photo sharing app. Both events, while seemingly unrelated, taught us a great deal about the importance and difficulty of due diligence in our modern world.

For background, investors at Dispo were left early from the start after a major investigation found allegations surrounding popular co-creator and YouTuber, David Dobrik. According to venture capitalists I spoke to, the move to “sever all ties” by Dispo was unique.

So what is the impact of this? It is an awkward awakening to the importance of due diligence. Regarding Equity, I argued that the Dispo news should encourage venture capitalists to work more deeply with future research founders. Dobrik’s Inquisitive “pranks” there was always a check away.

Even if no one person represents a whole company (Dispo team it looks good, for what it was worth), investors still left because of what their money represented. Quickly, this event could have a chilling effect on VCs working with celebrities or influencers. The burden seems to be just too much to support a startup led by people who may be a problem, so stay away or do your homework.

Well, you would think. Ironically, 24 hours after Dispo investors backed off from the start was YC Demo Day, one of the pavilion startup events of the year. My colleague joked that founders don’t just have to figure out how to get into Y Combinator anymore – they need to figure out how to stand out in the batch once they get there. The idea, made up of a joke, revealed a reality about the current start-up funding environment: too weird to handle.

Sound turned out to be a free investment. One investor I got an email from a badge company basically saying, “thank you for your interest, if you want to invest here in a document, proper diligence is not required. ”$ 100 million was launched. Another investor I spoke to said that a company asked to invest without meeting the VC.

While these are just news, I think these pitches are an example of the disconnect between the importance of due diligence and the circle of hype in which we find ourselves. As Dispo has shown us, it is absolutely positive to check on your future partner, get back the right startups and move on. the right money. As YC Demo Day has shown us, it’s hard to slow down when you can go fast. If the money is hanging in front of you, how can you say no?

I have no solution to the disconnect, and ultimately the change comes down to the philosophy of individual investors and founders. But at the very least, this week of fringes gives the starting mania a dose of truth right now.

In the rest of this newsletter, we will focus on a five-month one-horn, and Plaid harmony at the expense of Discord. As always, you will find me on Twitter @nmasc_.

‘From launch to unicorn in 5 months’

Pacaso, a start-up company that wants to make it easier for people to own a second home, has reached a valuation of $ 1 billion in just five months. The start-up calls for a resumption of times, with the aim of “bringing together a small group of co-owners to purchase a portion of a single-family home” with year-round access, Mary Ann Azevedo reports.

You get Weekly Startups in your inbox every Saturday, so subscribe here to join the cool kids.

Here’s what you know: The proptech unicorns are here to stay. My colleague Eric Eldon he wrote about the movements of buildings, from living together to living prosperity in a suburban style.

Revolution, and Plaid’s lack of it

There is even an ‘ol’ campaign giant to remind you that community is important. It is reported that Microsoft is trying to build Discord, in deal talks that would value the latter at $ 10 billion. Starting value was finally estimated at $ 7 billion.

Here’s what you know: The contract price feels a bit cheap, argues the Equity trio. When you consider the fact that Plaid could be valued at almost two or three times what it was going to be sold to Visa, it is important to consider whether Discord’s reliance on trust is limiting its prices.

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