by throwawaycities on 7/13/24, 3:13 PM with 59 comments
YC companies generally have quality brandable names. In the old days when I took the time to apply to YC .com TLDs were emphasized by PG himself for applicant startups.
Good business names and domains are always in demand, being able to acquire those together with trademarks is even more attractive as a business investment. If branded social media accounts are included, now you have a startup package that many established businesses don’t have.
Of course every IP portfolio would have its own valuation, but acquiring a dead YC company IP portfolio/brand would likely carry a premium from due diligence to the story/narrative.
Any insights, thoughts or stories?
by neilv on 7/13/24, 4:58 PM
How could you legitimately use the brand name, domain name, or branded social media accounts of a different company?
Sketchy SEO could use it. Or a criminal enterprise that needs a veneer of respectability. Or a business in a country with PR challenges could use the identity of a different company that didn't have those barriers.
But what legitimate things could, say, a US startup do with a defunct YC startup's brand?
Maybe you could do it legally, but wouldn't it be confusing every time you talk with a prospective investor, customer, or vendor?
"Oh, I see the confusion, ha ha... No we're not the Foobr that lost everyone's money, shut down abruptly on their customers, and maybe had to negotiate on their final bills from vendors... We're actually the Foobr that has the resourceful grit to graverob a failed brand. I know, it's a feather in our cap, we're not too modest to admit!"
by neilv on 7/13/24, 4:39 PM
(Sorta like when an app startup builds an enabling piece of infrastructure tech, and realizes that's more golden than their original idea, so they pivot to B2B that tech to other startups and/or enterprises. Only sometimes the company is liquidated before that pivot or open sourcing.)
by snowwrestler on 7/13/24, 4:58 PM
Not sure if they were just “first in line” for it all, or if they passed anything on to minority investors.
It probably comes down to who has how much equity in the business, and what the terms say. It is essentially a bankruptcy so it could end up in court I guess, but typically the value is so low compared to the investment that it’s not worth any lawyer time.
And if it’s not in court, there’s really no vector for public visibility. If you’re interested in a particular company you will need to do some detective work to find out who still has what.
by Founder82836 on 7/13/24, 7:14 PM
Imagine the founders raised $20M in exchange for 50% of the company. The founders make precisely zero if they sell the company for less than $20,000,001 because the investors get first claim to their share up to the amount they originally invested.
If the company goes out of business and the brand could be sold off for $50k, it doesn't really benefit anyone to do it. The VCs have better things to do with their time. They probably spent more than $50k researching and securing the initial investment. They are in the game of chasing 100x returns, not trying up their lawyers trying to reclaim peanuts. Plus, they don't want to sell their failed brands to someone who might sully their name by association. The founders would get nothing anyway from a small sale, so they just move on. The assets end up in limbo somewhere and no one cares enough to do anything with them while they wither and die.
by travoc on 7/13/24, 5:04 PM
by yawnxyz on 7/13/24, 4:23 PM
Do they sell them at a bargain?
by codegeek on 7/14/24, 5:50 PM
I personally was involved in trying to acquire a failed YC product (wont call it company by that time) that was already sold earlier by original founders and the previous buyer was reselling because he couldn't do anything with it. We didn't agree on a price so I walked. At that time, it was already listed for a much smaller value than what a VC would like. Think really small like in the low hundreds of thousands, forget millions.
I also have spoken to a previous YC founder whose startup failed and they basically got acqui-hired and he was really unhappy with how everything turned out. No one remembers their brand name.
As few other comments have already pointed, brand names are overrated especially for failed companies. No one remembers that name because they weren't popular to begin with. Its not like every YC company has a well known brand. Far from it especially nowadays when YC funds so many.
by phendrenad2 on 7/13/24, 6:42 PM
by danjl on 7/13/24, 6:06 PM
by simonbarker87 on 7/13/24, 4:50 PM
Realising value from the assets (both tangible and intangible) might be via selling the business or just a fire sale of what they can make a return on.
Source: owned an investment backed company that we put into administration after 8 years when something happened that we couldn’t trade through.
by bombcar on 7/13/24, 4:46 PM
Domains eventually revert to the registrar and someone snaps them up.
by thekevan on 7/13/24, 6:09 PM
It could be a cheap relabeling of existing products but if all the company who is doing that say is, "Yo, we bought the brand." and doesn't hide it or make false claims, that is completely legit.
It's a pretty smart move if the price is right, which can be a big "if".
by shubhamjain on 7/13/24, 4:44 PM
by runnr_az on 7/13/24, 9:07 PM
by leshokunin on 7/13/24, 7:13 PM
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