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I would expect YC just to write off $500000k.

For a lawsuit against a founder the reputation risk to YC is high. YC needs to keep their reputation for integrity high with their founders, and any lawsuit against a dishonest founder has a high risk of negative perceptions against YC with extremely costly outcomes for YC (regardless of how unfair that might be). Founders have enough worries without the added fear that YC might sue them.

Also the opportunity cost of chasing a lawsuit is high: I would expect YC to focus their resources on their successful investments instead.



Edit: $500k - sorry for the obviously silly mistake.




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