I was shocked that a LOT of startup founders are well-connected rich kids who have no skills or ability to lead a tech company. I learned that, while saying that you have a huge trust fund isn't very cool, saying that you're a tech entrepreneur CEO is perceived as cool. So the rich family uses their connections to raise a few million (often indirectly) and suddenly the kid is an "entrepreneur", despite lacking any relevant skill sets. It's not like there's any expectation for these companies to make a profit anyway.
Yes, you can avoid these companies, but it's worth warning younger engineers that this is maybe 50% of tech startups. It's more of a problem with NYC based companies than SF based companies (as NYC has more old money and less emphasis on tech companies actually building real tech) but I've seen it in both cities.