Y Combinator’s Biggest Demo Day Yet Draws Throng Of Investors

I would guess that it has something to do with the increasing value of the YCombinator brand name. In 2006, a company that is already earning good revenues isn't going to give PG a chunk of equity in exchange for $15,000, some free meals, and advice. In 2010 a YC investment still offers $15,000, free meals, and advice, but it also guarantees that you will catch the eye of top flight VCs, be part of an alumni network laden with talent, and get great publicity. That's appealing even to companies that have an established product.

PG was asked that ... somewhere (Mixergy?). He said that it was pretty much setup such that YC wouldn't get any money without a liquidity event (because that's what they expect companies to go after), but he did say that theoretically they might be able to work something out whereby a profitable company that doesn't want to exit pays dividends to all stock holders, which of course includes YC.

Edit: it was indeed Mixergy:

Andrew: If a Y Combinator company becomes a lifestyle company, can you guys still profit from the business?

PG: No. I mean there’s got to be an exit for it, equity holders to get any money. I mean, maybe — maybe in the future there is some model where companies pay dividends instead of an exit that like we’ve never tried to get anybody to do that, and we don’t have any real hopes about it. So, no.

I pulled it from http://webcache.googleusercontent.com/search?q=cache:Qp7sHPm... because http://mixergy.com/y-combinator-paul-graham/ is just giving me a white box and a gray background.

There are companies that are off the record every in pretty much every YC batch. Attendees are asked to keep those companies "off the record".

YC doesn't require any NDA that I am aware of. I'd expect that the risk of being excluded from future demo day events if you disclosed off the record companies would be a better deterrent than an NDA in this case.

no. we do not make anyone sign an NDA.

what happens is if a startup has not yet publicly launched and still wants to be able to give someone an exclusive/control how they launch then they mark themselves as off the record. what this prevents is someone briefly mentioning them in an article and then another publication refusing to write about them because it's already been 'covered'. if the startup doesn't care about this, then they keep themselves on record.

It's true that there are 13 companies that pitched yesterday but haven't launched. And one that didn't pitch at all. Attendees at Demo Day aren't asked to sign NDAs. There's just a gentlemen's agreement (sexist term isn't it?) not to write, tweet, blog, etc. about the companies that haven't launched yet.

With regard to the points Harj and others make in this thread about TechCrunch, I have no idea if they have a policy of turning up their nose at companies that have already been covered elsewhere. I certainly would never agree to YC's off-the-record request for that reason. I observe it because I think the YC companies deserve a chance to control how they make their first big public splash.

I believe this is such a list:

https://spreadsheets.google.com/ccc?key=0AkkhSN3vaY4jdF90b1l...

YC startups tend to launch in TechCrunch, but TC by no means has a lock on YC coverage. I invite you to check out Xconomy's debrief on Demo Day and compare it to TechCrunch's version. ;-)

http://www.xconomy.com/san-francisco/2010/08/25/the-definiti...

From what I can tell there’s a huge bond between the two

You're falling for the percentage trick that works really well when your numbers are tiny.

"I've grown revenue 300% month-over-month for the past six months" -- "How much in absolute dollars?" -- "Oh, well almost $400 this month I think"

That of course depends on how many people are signing up each week.