Deals Are Done on Handshakes and Papered by Lawyers

With YC Demo Day, there’s a specific rhythm to how investors commit money. To move fast — which benefits both the founders and the investors — there’s an unwritten but widely understood protocol: once an investor and a founder agree on terms over email, text, or any other written form, and both sides confirm, that’s considered a done deal. From that point, the investor is expected to follow through and wire the money.

This handshake-style approach is kind of a norm across venture. What I’ve realized as a founder — and really taken to heart — is that deals are done on handshakes (handshakes meaning texts, DMs, quick calls), and finalized by lawyers.

YC, for example, has a great system for formalizing things through the YC SAFE, which makes the legal side clean and standardized. But beyond that, in a lot of venture, you’ll find deals that are essentially verbal or informal agreements, with the paperwork and diligence following after.

In my first company, I did a bunch of handshake deals — some that worked out fine, and some where I learned the hard way. Like, I did a few without even fully checking in with the other side to make sure we were actually aligned. I kind of assumed the handshake was mutual when maybe it wasn’t.

But I’ll save my personal deal stories for another time. For now, I think it’s just useful for founders to understand this culture — that in startup land, the real commitment often happens in the handshake moment. Everything after that? That’s just lawyers cleaning it up.