AI Summary
5 min readCompliance Startup Scandal... Is Delve Guilty? | E2266
The biggest startup scandal of the week centers on Delve, a YC-backed compliance startup that allegedly faked hundreds of SOC 2 reports — swapping logos across boilerplate documents, claiming zero auditor findings across 259 type-two reports (statistically impossible), and leaking customer data including background checks and API tokens. The anonymous investigation, published as a Substack by "deep delver," has sent shockwaves through the compliance industry and raised uncomfortable questions about how much fraud can hide inside a hype cycle.
The Delve Allegations: What Actually Happened
Ryan Madavi, founder and CEO of SEAL (a direct competitor in automated compliance), walked through the granular accusations. The core claim: Delve produced roughly 500 boilerplate reports with identical errors, simply swapping client logos. Of those, 259 were type-two SOC 2 reports — the more rigorous version — and every single one had zero auditor findings. "Which is almost statistically impossible," Madavi said. Affected brands included Lovable, Bland, Cluley, and Duo's Edge, a public company.
Continue reading the full summary in the app — free to try.
Read Full Summary →Free • No credit card required
What you'll learn
- 1 (00:00) **Show Open & Host Banter** - Jason and Alex welcome viewers, discuss Jason's ski season and weight loss
- 2 (03:40) **Interview: Elizabeth Yin (Hustle Fund) on AI's Impact on Early Startup Investing** - How the AI revolution has changed startup creation, capital needs, and investor diligence
- 3 (13:20) **Interview: Ryan Madavi (SEAL) on the Delve Compliance Scandal** - A deep dive into the allegations that YC-backed Delve faked compliance reports
- 4 (22:18) **Fraud Detection & Diligence Best Practices** - Jason and Elizabeth share red flags and how to vet startup founders
- 5 (28:01) **How the Delve Fraud Could Have Been Caught** - Ryan argues a simple 30-minute demo would have exposed the fake features
- 6 (45:28) **Interview: Seb Shang (Brick) on AI-Native Energy Savings** - Brick uses a hardware device and AI agent to optimize HVAC systems, saving 15-35% on energy
- 7 (56:13) **Jason's Tau (BitTensor) Thesis** - Jason explains his bullish bet on the BitTensor ecosystem and its subnets
+ Full timestamped outline available in the app
Show Notes
This Week In Startups is made possible by:
Northwest Registered Agent - https://northwestregisteredagent.com/twist
LinkedIn Jobs - https://linkedIn.com/twist
Sentry - https://sentry.io/twist
Plaud - http://Plaud.ai/twist
Ro.co - http://Ro.co/Twist
Today’s show:
Hustle Fund general partner Elizabeth Yin joined Jason and Alex to discuss how rapid advances in AI have changed the venture capital game, and how the same AI updates are changing how founders build. Founders may need less capital than before, which could reduce their reliance on venture dollars over time.
Ceel founder Ryan Mahdavi joined next to help Jason and Alex dig into the Delve story. Well-funded Delve was publicly criticized for allegedly overselling their compliance tool’s capabilities and not being honest with customers. Delve has responded to the allegations, though Mahdavi said that he had his doubts about the competing startup even before the news story broke.
Next, TWiST invited Brick founder Seg Sheng on to explain his startup’s plan to use a combination of physical hardware and artificial intelligence to help buildings and data centers reduce their energy bills. Given how much juice the AI era demands, Brick could be onto something big.
And to close out the show, Gavin Zaentz and Pranav Ramesh from LeadPoet (Bittensor Subnet 71) to show off their technology (the pair put in motion a lead hunt for Brick while on-air). It’s a packed show with something for everyone. Let’s go!
Timestamps:
0:00 Intro
1:18 Plaud: If your work depends on conversations — interviews, meetings, calls — you need a Plaud NotePin. You can check it out at https://Plaud.ai/twist and use code TWIST for 10% off!
3:45 Elizabeth Yin from Hustle Fund on how AI tools have changed her workflow
9:21 How founders use AI to learn how to suck less
10:34 Sentry - New users can get $240 in free credits when they go to https://sentry.io/twist and use the code TWIST
13:17 Ryan Mahdavi from Ceel joins to explain the Delve SOC 2 scandal
18:39 Is Silicon Valley's "bend the rules" culture at fault?
20:38 Red and pink flags, and how investors can spot potential fraud
21:41 LinkedIn Jobs - Hire right, the first time. Post your first job and get $100 off towards your job post at https://LinkedIn.com/twist
23:45 How to not do securities fraud: a simple guide
26:50 Ryan asks: How did the company get through diligence?
31:03 Northwest Registered Agent — Get more when you start your business with Northwest. In 10 clicks and 10 minutes, you can form your company and walk away with a real business identity — Learn more at https://northwestregisteredagent.com/twist More from this podcast