What 411 YC Demo Day pitches will teach you about startups


Y Combinator’s Summer 21 Demo Day, Part 1
Image Credits: Bryce Durbin / TechCrunch

Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

It’s YC week, and while I love to question how the accelerator’s impact is evolving in today’s climate, there’s always a lot to learn about hundreds of founders coming together and debuting their businesses to the world. I, alongside some of my favorites on the TechCrunch and TechCrunch+ team, covered Y Combinator Winter 2022 Demo Day with a series of posts:

Now that we’re done, though, I want to leave you with a few takeaways I had after listening to hundreds of pitches. Here’s what 411 Demo Day pitches will teach you about startups:

India is all about fintech: India was the most represented country, other than the United States in the Winter 2022 batch. For what it’s worth, more than 191 companies in India have been funded through the Y Combinator accelerator, with nearly half — half! —  of those companies accepted in the last 12 months. 

  • Demo Day isn’t for funding, anymore: During Equity this week, we chatted about how demo days have evolved in utility, and if the performance in and of itself is outdated. I won’t ruin our eventual conclusion, but I will mention some illustrious YC data. This year, YC said that it backs startups at any stage for its accelerator, and that more than half of the companies raised money prior to acceptance. To me that means that the accelerator isn’t really for the pre-seed company seeking its first check, but for any company that wants access to the YC network.
  • Competition is inevitable: We noticed that a number of startups basically directly compete with each other in this season’s batch, which isn’t a new trend but perhaps a more noteworthy one as the accelerator scales. Most early-stage investors I speak to try to avoid any semblance of conflict of interest, so YC backing companies in the same geography, with identical business models and founding years is contrarian in a way. It seems like the accelerator has avoided any public tensions so far by separating similar startups from each other — but with around a 2% acceptance rate, one has to wonder how similar bets are determined.

I did an earlier version of this column in September, titled “What 377 Y Combinator pitches will teach you about startups.” Months later, the accelerator has grown its expanse, with nearly half of its companies based outside the United States and new representation from New Zealand, Sudan, Uganda and Costa Rica.

I’ll remind you all, as I always do, that YC — similar to any singular institution — isn’t entirely illustrative of the next wave of decision-makers and leaders within startups. Its growing check size, for example, knocked out a whole slew of funders who once poached deal flow from demo day. And when it comes to diversity, the accelerator dipped in support for some underrepresented groups.

In the rest of this newsletter, we’ll look at an edtech round in India, getting rid of pro rata and Cross River Bank’s atypical raise. As always, you can support me by forwarding this newsletter to a friend, following me on Twitter or subscribing to my personal blog.

Deal of the week

Classplus! As our own Manish Singh points out, “at a time when so many edtech firms in India are attempting to cut their reliance on teachers, a Noida-based startup that is helping teachers and creators operate, manage and sell courses to students has raised $70 million in a new financing round.” The startup, now valued at $570 million, is just four years old.

Here’s why it’s important: Offline coaching — in which tutors go in-person to teach students on a variety of subjects — is still very popular in India, however it’s limited by geography. The pandemic, and a broader digitization across the globe, has made some teachers pursue online opportunities to grow their larger businesses. Classplus’ ability to raise money means that urban India has enough demand to be a venture-backable market.

Honorable mentions:

Let’s get rid of pro rata

Investors Vijay Chattha and Jay Kapoor, who co-founded a venture firm spin out from a PR company, recently wrote an op-ed arguing that VC should abolish pro rata. The duo drew from a portfolio survey and found that investors rarely provide value-add beyond 90 days from the signed term sheet. “At that point, the investor’s engagement is limited to their attendance at the quarterly board meeting — and that’s the lead investor,” the op-ed continues.

The investors thus think that their peers shouldn’t invoke contractually negotiated pro-rata rights if they aren’t involved in the business, since “their mere presence on the cap table disincentivizes other VCs from working harder for their founders.”

Here’s why it’s important: Chattha and Kapoor’s argument is contrarian, because it bets on investors changing their habits at the cost of their own returns. However, I like that it’s asking investors to raise their bar on involvement and influence once they land that coveted cap table spot. It’s easy to give up pro rata in a startup that is struggling, but what about needing to constantly prove yourself to your highest valued company? Incentive alignment for days, if you ask me.

Other surprises from the week:

blank check SPAC
Image Credits: Lawrence Anareta / Getty Images

From tiny to mighty, real fast

Cross River Bank has raised $620 million in funding at a valuation north of $3 billion. The company provides technology infrastructure to venture-backed lending and payments, making the raise somewhat of a double bet on fintech’s boom.

Here’s why it’s important: Fintech startups raised $121.6 billion last year — up 153% year-over-year in terms of global VC deal value, however, as Mary Ann pointed out, it’s atypical to pour millions of dollars into a traditional bank. Andreessen Horowitz general partner David George explained why he is so interested in the company:

“When Coinbase was first starting out and looking for a partner bank, many traditional financial institutions had blanket policies that prevented them from participating in crypto,” George told TechCrunch. “Cross River, on the other hand, had the foresight to lean into this new frontier and support Coinbase, and many other leading crypto companies, who are still happy partners to this day.”

Validation for days:

Image of a hand inserting a speech bubble into a white piggy bank against a purple background.
Image Credits: Boris Zhitkov (opens in a new window) / Getty Images

Across the week

We get to hang out in person! Soon! TechCrunch Early Stage 2022 is April 14, aka right around the corner, and it’s in San Francisco. Join us for a one-day founder summit featuring GV’s Terri Burns, Greylock’s Glen Evans and Felicis’ Aydin Sekut. The TC team has been fiending to get back in person, so don’t be surprised if panels are a little spicier than usual.

Here’s the full agenda, and grab your launch tickets here.

Follow our new senior crypto reporter, Jacquelyn Melinek and our new senior enterprise reporter, Kyle Wiggers. 

Finally, if you missed last week’s Startups Weekly, read it here: “We keep trying to reinvent startup accelerators.”

Seen on TechCrunch

a16z, NFX back Latitud’s effort to become ‘the operating system for every venture-backed company in LatAm’ 

People are sending 7 billion voice messages on WhatsApp every day 

Are we about to see a unicorn selloff? 

Lightning strikes again as Electric hits unicorn status 

Seen on TechCrunch+

Crypto mining is approaching a key inflection point

How to make a teaser trailer for your startup pitch

EquityZen’s Phil Haslett on how startup valuations can regain their moxie

How Plaid’s CTO grew his engineering team 17.5x in 4 years

Are we seeing evidence of a startup slowdown?

Until next time,


More TechCrunch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

22 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

3 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

3 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info