Ask HN: Do dead YC companies sell their brands/IP?

> 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.

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!"

I have no insight, but I always wondered what happens to the $100k+ domains that VC-funded startups buy and then go bust.

Do they sell them at a bargain?

I would imagine it’s the same as any other business. They declare bankruptcy, put the business into administration, appoint administrators who then determine how much the assets are worth and how to realise any value from those assets to pay off any creditors/shareholders/take their fee.

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.

Worked at a dotcom which ran out of funding after Series A. After all the staff got laid off, the email list, domain, brand materials, and web content were all transferred to the lead investor of the Series A.

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.

It can be entirely frustrating to find out who owns IP, code, etc. often is seems to disappear into an unknown abandonware type limbo.

Domains eventually revert to the registrar and someone snaps them up.

I'm curious how a failed startups can liquidate IP, since I've seen startups go under with "secret sauce" code that could've been a whole new startup... but assets are sold for a token amount of money to someone who presumably had no idea what they own, since it's never heard from again.

(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.)

A YC Company is no different than any Business when it comes to failures. Once it has failed, it will either sell its "assets" (very commonly known as Asset Sale), do an acqui-hire or just fold completely because no one wants to buy even their "assets".

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.

I was curious about this a few years ago also. Seems to me that, as of now, the YC strategy seems to be to hold on to these brand names indefinitely. That's why so many YC companies that are obviously dead continue to occasionally release press releases and blog posts.

How would one go about selling a good domain name and twitter handle for a failed project?

Are you asking for shits and giggles or are you looking at doing a business here?

Startups often have liquidation preferences in the fundraising contracts. This means investors get paid out first in a liquidity event before anyone else.

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.

Usually there’s a broke founder who refuses to let the dream go.

Most of the time, the remaining assets are lost to the world. Often despite efforts to release the code and other media. Typically, the people involved in the wind down are not people who care about the assets and generally only care about liability.

It could be a competitor (Stark Industries) that is getting large. If the brand still has SEO or social juice, buying it then rebranding it as something like "Wayne Enterprises, now a Stark Industries Company".

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".

I have no inside knowledge, but I'd guess that if those are valuable, they probably acquired. If not, those things won't amount to much. Sure, you could sell your brand and domain and fetch a couple of thousand dollars, but would that be worth the effort and risk of someone using your (even if dead) brand to do illegal stuff? I guess not! It's better to just write the whole thing off.

I’d love to start a business buying up old band brands, licensing them out. HMU if you wanna join me

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