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What's to stop you from taking YC's money, then selling the company to your wife for $1, assets included, and then shutting down? YC is very lax in what they a
by mattmaroon 18y ago
What's to stop you from taking YC's money, then selling the company to your wife for $1, assets included, and then shutting down?
YC is very lax in what they allow. There are definitely some deals they've approved that I suspect a normal angel would have blocked in order to hold out for more. But they still need protection from unscrupulous founders.
- sachinag 18y agoYou have a fiduciary duty to your minority investors. They can sue your ass if you try this. Look, I understand - if I was going to do it all over again, I'd go through the YC process. But I still do not understand what the purpose of that term is if they're never going to exercise it.
- mattmaroon 18y agoFiduciary duties are murky, and what exactly would Y Combinator sue for? They'd spend 20x more in legal fees than they invested, and after they won, what would they get? None of their $15-20k back (would be gone in legal fees from the startup they sued, if it weren't already wasted) and control of a company that was comprised of 2 or 3 founders who are now gone for obvious reasons. In the end they'd end up spending a couple hundred grand on a mediocre domain name. Doesn't it seem far better to just have that provision? I have no doubt they'll exercise that provision if they have to. Having that provision ensures they won't. It's like mutually assured destruction, in that having a large nuclear arsenal prevents both sides from ever using it.
- bk 18y agoRelationships. Why would you go through applying, having smart enough things to say to get chosen, and then "run off" with a "bounty" of 10-15k, while at the same time burning bridges to an extremely helpful and influential network of people (and possible future investors)? YC's benefits are scarcely about the money.