6 Quick Thoughts on YC Demo Day S16

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I’m just coming up for air from 3 great days at YC. Here are a few quick observations about the program & the new format:

Demo Day is the Best Tech Industry Trade Show, by a Mile

YC Demo Day is not only the premier event for scouting new investments, but it’s also the best forum to get face to face with all the new and established VCs and angels in the tech ecosystem. It’s hard to think of a firm that doesn’t show up, and even if you don’t make an investment, the ability to catch up with anyone is unparalleled. (The hot pretzels are a particular perk!) Best of all, people tend to hang out all day, unlike most shows where key figures drop in for a panel and scoot out just as quickly.

The Democratization of Deal flow — YC, AngelList, et al.

YC has become increasingly transparent and open. Everyone sees the same deals. The firms are physically co-located for their meetings so everyone can see which startups their peers are talking to and whether they seem excited or not. All the secrecy, “proprietary deal flow,” and other hallmarks of VC fade away. Like AngeList, it’s arguably the most open investing marketplace for start-ups out there. Kudos to the team in evolving the platform.

IRR vs. What If?

YC curates companies from DNA tested cows to sales tools.

Investors see 70+ “traditional” startups with strong products, compelling teams, and traction which are poised to make a huge impact, right now.

Then there are ~20 companies exploring emerging tech, hardware, and the healthcare/bio nexus. These inspiring companies (from an allergy testing patch to a wearable calorie counter) are truly transformational, and it gives investors and entrepreneurs an opportunity to see the full breadth of innovation. I hope we continue to see more of these even though they have different risk profiles around regulatory clearance, technology viability, and business model.

Cruise is an example of what can come out of the latter group, so ignore it at your peril!

Beyond Demo Day

Demo day creates FOMO, but there are plenty of companies that keep fundraising for weeks and months after. There is still the sense of urgency to move quickly, but the teams seem to have internalized YC’s advice that companies should seek quality investors, not just marginally better terms.

At Founder Collective, we have backed in 24 YC companies (Cruise, Codecademy, and Firebase to name a few) since our inception. The majority were invested before or well after Demo Day. So we don’t view Demo Day as just one discrete event but rather a part of a relationship building process.

Fewer Bots, More AI, Computer Vision & Humans

AI is touching almost every sector of the tech world, but to borrow a phrase from Marc Andreessen, AI is only nibbling, not eating. With this YC batch, we saw many impressive AI and computer vision tools, but there was a definite recognition that humans would likely be in the loop for some time to come.

YC Keeps Innovating — Just Like the Companies Themselves

The tools YC is building to connect investors and founders are great in further democratizing the relationships between entrepreneurs and the VC community. There’s plenty of room for improvement, and I’m glad to hear how open the partners were to feedback and thinking about version 2.0 for the next batch.

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Our mission is to be the most aligned VC for founders at seed. #ProudInvestor in @Uber @TheTradeDeskinc @Buzzfeed @Cruise @Diaandco @PillPack @SeatGeek & more.

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