YC companies selling to each other to fake ARR before fundraising
An open secret in Silicon Valley: YC B2B startups form revenue rings, becoming each other's customers to inflate ARR to $1M+ within 30 days of batch, making metrics look real enough to raise a Series A from investors who don't ask where the revenue comes from . Paul Graham acknowledged it happens: 'If they form rings to do this, that's bad, and the partners crack down hard on it.' Critics call it the 'YC Ponzi scheme.' Someone even created a satirical startup called 'ShadowARR' — 'We help YC-backed companies swap revenue with each other. Indistinguishable from real customers!' The joke hit too close to home.
Satirical project. Not affiliated with Y Combinator. All information from public records.