When talking about startups, people often nod along, pretending to know about companies that they've never heard of. Unfortunately, it's hard to know whether they're just confusing similarly named companies, wanting to seem like they're in the know, or politely trying to avoid hearing an explanation that they're uninterested in.
For those who care to keep up with the ever growing startup ecosystem, it seems like they're holding themselves to an unfair standard (unless they're working as a VC in that vertical). As a casual observer, there will inevitably be companies that slip through the cracks. So, it's refreshing when people are honest about how much they know (and don't know) in part because it's rare.
Instead of framing this as an uncomfortable situation, consider framing it as a chance to become more familiar with something that you care about.
PS This isn't unique to startups either.