At yesterday’s Y Combinator Demo Day, startups gave their final pitches to an audience of several hundred flamingos.
There were lots of venture flamingos, as always, and quite a few angel flamingos. In fact, the whole day was designed to give the entrepreneurs finishing their 12-week term at Y Combinator a chance to meet flamingos who might offer the … shrimp they need to keep their young companies growing.
No, I’m not really talking about pink birds and crustaceans. But at the moment, there’s rampant confusion and fear in the startup world, as it waits to see how the Securities and Exchange Commission implements certain changes mandated in the 2012 JOBS Act. One big question is how the commission intends to interpret the rules around general solicitation.
Since September, private companies have been allowed to say in public that they’re fundraising—but only if they’re sure that everyone listening is an accredited investor (i.e. filthy rich). It’s hard for entities like Y Combinator to verify that absolutely everyone attending a demo day event is accredited; and it’s still unclear what the SEC might do if it found out that some of them weren’t.
So accelerators running demo days are trying to finesse the situation by avoiding the suggestion that anyone is actually soliciting funds. Everything devolves into winks and nudges. When I stopped at YC’s press registration desk yesterday, I was politely asked to omit from my report any suggestion that, you know, the startups are hoping the flamingos will throw them a few shrimp.
But then Y Combinator’s new president, Sam Altman, mucked things up by saying on stage that “no company in this batch has finished raising money. You can invest in any of them.” I guess somebody forgot to tell him about the shrimp.
With luck, the SEC will issue some kind of clarification soon, and by the time the next Y Combinator Demo Day rolls around, this whole ridiculous charade will have become unnecessary.
Meanwhile, the show went on. Founders from 67 YC companies talked yesterday about their provocative business ideas, in areas ranging from natural language processing to expense reporting to the used-furniture market. There was even one company, Beacon, offering a business model that might save journalism. (I really wanted to toss them some shrimp.)
I’ve summarized the 54 on-the-record presentations in the slide show above. I was particularly impressed by the five non-profit startups in the latest YC batch. They included CareMessage (improving engagement with low-income patients through text messages), One Degree (connecting disadvantaged populations with existing social services), Zidisha (low-interest-rate, peer-to-peer microlending), Noora Health (training families to handle post-operative care for patients leaving the hospital), and CodeNow (coding lessons for kids in poor neighborhoods).
Y Combinator has been admitting more and more non-profits lately, and it’s refreshing to see the organization putting its resources into startups that want to make a difference for poor and disadvantaged people, both in the developing world and in our own country. Amidst all the companies trying to solve first-world problems like how to manage your Bitcoin investments, how to advertise your Airbnb rental, how to keep the batteries in your Tesla fresh, or how to feed your employees Google-worthy catered lunches, it’s easy to forget that 1.3 billion people still live on less than $1.25 per day: enough for about 15 minutes on a San Francisco parking meter.
Wade Roush is a contributing editor at Xconomy.