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There is always a lot to learn about hundreds of founders coming together and debuting their businesses at YC week. I was one of the people who covered Y Combinator Winter 2022 demo day with a series of posts.

After listening to hundreds of pitches, I want to leave you with a few things. 411 demo day pitches will teach you about startups.

India was the most represented country in the Winter 2022, other than the United States. Nearly half of the companies in India that have been funded through the Y Combinator program have been accepted in the last year.

  • Demo Day isn’t for funding, anymore: During Equity this week, we chatted about how demo days have evolved in utility, and if the performance in and of itself is outdated. I won’t ruin our eventual conclusion, but I will mention some illustrious YC data. This year, YC said that it backs startups at any stage for its accelerator, and that more than half of the companies raised money prior to acceptance. To me that means that the accelerator isn’t really for the pre-seed company seeking its first check, but for any company that wants access to the YC network.
  • Competition is inevitable: We noticed that a number of startups basically directly compete with each other in this season’s batch, which isn’t a new trend but perhaps a more noteworthy one as the accelerator scales. Most early-stage investors I speak to try to avoid any semblance of conflict of interest, so YC backing companies in the same geography, with identical business models and founding years is contrarian in a way. It seems like the accelerator has avoided any public tensions so far by separating similar startups from each other — but with around a 2% acceptance rate, one has to wonder how similar bets are determined.

In September, I wrote a column titled "What 377 Y Combinator pitches will teach you about startup", which was updated months later.

I always remind you that YC isn't an illustrative example of the next wave of decision-makers and leaders within startups. The funders who used to take deal flow from demo day have been knocked out by its growing check size. Some underrepresented groups were supported by the accelerator when it came to diversity.

We will look at an edtech round in India, getting rid of pro rata and Cross River Bank's atypical raise in the rest of this newsletter. You can support me by forwarding this newsletter to a friend or following me on social media.

Deal of the week

Classplus! At a time when so many edtech firms in India are attempting to cut their reliance on teachers, a Noida-based startup that is helping teachers and creators operate, manage and sell courses to students has raised $70 million.

Offline coaching, in which tutors go in-person to teach students on a variety of subjects, is still very popular in India, however it is limited by geography. Some teachers have found online opportunities to grow their businesses because of the Pandemic. The ability to raise money means that urban India has enough demand to be a venture-backable market.

Mentions of honorable nature.

Let’s get rid of pro rata

The co-founding partners of a venture firm wrote an op-ed arguing for the abolition of pro rata. The survey found that investors rarely provide value-add beyond 90 days from the signed term sheet.

The investors think that their peers shouldn't invoke contractually negotiated pro-rata rights if they aren't involved in the business.

The argument is contrarian because it bets on investors changing their habits at the cost of their own returns. I like that it requires investors to raise their bar of involvement and influence once they land that coveted cap table spot. It is easy to give up pro rata in a startup that is struggling, but what about having to prove yourself to your highest valued company? If you ask me, I'll give you an incentive alignment for days.

There were other surprises this week.

blank check SPAC

Lawrence Anareta was credited with the image.

From tiny to mighty, real fast

Cross River Bank has raised $620 million in funding. The company provides technology infrastructure to venture-backed lending and payments, making the raise somewhat of a double bet.

Mary Ann pointed out that it was atypical that the value of global VC deals went up 153% last year. David George is a general partner of the company.

“When Coinbase was first starting out and looking for a partner bank, many traditional financial institutions had blanket policies that prevented them from participating in crypto,” George told TechCrunch. “Cross River, on the other hand, had the foresight to lean into this new frontier and support Coinbase, and many other leading crypto companies, who are still happy partners to this day.”

There is validation for days.

Across the week

We get to hang out with each other. Soon! The Early Stage is in San Francisco on April 14. Join us for a one-day founder summit featuring some of your favorite people. Don't be surprised if the panels are a little more spicy than usual, the team has been itching to get back in person.

You can grab your launch tickets here.

Follow our new senior enterprise reporter, Kyle Wiggers.

If you missed it last week, you can read it here.

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The operating system for every venture-backed company in LatAm is being worked on by Latitud.

There are 7 billion voice messages sent on the platform every day.

Are we about to see a selloff?

Electric hits unicorn status as lightning strikes again.

It was seen on the tech site.

There is a key point in the mining of cryptocurrencies.

How to make a trailer for your startup.

Phil Haslett of EquityZen talks about how startup valuations can regain their moxie.

How Plaid's CTO grew his engineering team in 4 years.

Is there evidence of a startup slowdown?

Next time.