Rotman: YC encourages artificial growth for Demo Day, causing VCs to overpay
Frank Rotman · DEBATE: State of Seed Investing w/ Jason Lemkin, Sam Lessin, Frank Rotman & Harry Stebbings | E1047 · 20VC with Harry Stebbings · Aug 11, 2023 · at 39:17
Frank Rotman, founding partner at QED Investors, discusses the downsides of accelerator batch models like Y Combinator during a 20VC panel debate on seed investing.
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“A lot of the growth trajectory was in unscalable things in order to get the up and to the right, 45 degree chart so that you can package it for demo day. You know, so there are a lot of artificial things done in order to package it, like you know, to Sam's point, it will come off the factory all looking the same. And a lot of that advice you actually have to undo, you know, if you end up funding the company. So you end up overpaying and then having to undo a bunch of the damage. You know, that was done by setting up the company in the first place in the way that they got their early results.”
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