|Always find the exhibition to be more interesting than the pitches. I want to ask my own questions|
I've been asked to do a critique of the various forms of Demo Day that I've witnessed over the past 18 months. I'm particularly curious to measure whether the performance on the day itself was really the trigger for an investor deciding to build a relationship with a particular team. Or was it simply a performance in front of an invited audience?
I've been fortunate to have a front row at such events, being involved behind the scenes at various accelerator demo days in 7 countries. I have also been attending large demo-day/pitching events like Techcrunch Disrupt, TEDx, TNW, and contests like Accenture's Blue Tulip Awards. Insights are beginning to emerge.
|Very variable pitch qualities|
Demo Days are very similar in that most events are a beauty contest format. Each team gets between 5 and 8 minutes to present their company and then pitch for funding. They all end with an invitation to talk afterwards.
As John Hagel III pointed out in a recent blogpost, the stories that young companies often tell are ineffective. They should be open ended narratives, explaining why those investors in the audience should get involved. Instead, the pitches are often a boast that a particular team who have been working together for a couple of years are more than qualified to wipe away the competition. Infact the audience has no real proof of the team dynamics. And often the core story is wrapped up in wild claims and stats which can't be verified at the moment of delivery. I've come to a point where I immediately draw a red line through any company that claims they are working in a billion/trillion dollar market.
I have seen companies with brilliant ideas and customer verified products fail miserably on Demo Day. Yes the presentation was slick, but it didn't encourage me to investigate further. Because I was left with the impression that all the team needed was money. I have also seen very slick presentations which fall apart as soon as you start to do due diligence on the company story. All show, but no real substance.
Standing Out From The CrowdThere are over 300 tech accelerators in the world, not to mention countless start-up prizes, conferences, competitions. So perhaps it is not surprising that many demo days are starting to look like the endless talent shows that we see on television. But just as interest in talent shows is waning, there's a danger that demo days need to develop as well. They could be killed by their own routine.
Demo Day is still important. But it needs to pivot itself. And I believe that the founders of the Lean Startup Movement believe change is now overdue.
I have great respect for Steve Blank, especially the recent work he has done to take the Start-Up community to the next level with the US National Science Foundation. If you look at the Lean Start-Up Launchpad, or investigate the HUGE list of resources on his blog, you will discover that the conversation IS moving on.
Blank says in second part of the Forbes interview below that he's concerned that not enough attention is being paid to the interaction between incubators and investors. He points the finger firmly at "Demo Days". Most are too focussed on arranging the performance of a great pitch rather than assisting startups demonstrate to investors that they are really a viable company. There's a lot of shouting when information sharing is called for. And, in my experience, people never collaborate with those who raise their voice.
Blank argues that instead of making a flashy demo pitch, companies need to show they have really built a match between what they make and what the customer needs. Startups need to explain why they started, what they built, what they found when they talked to customers, what they did as a result and where they are going. It's an open-ended company narrative not a finished, polished story. Only then can the audience of investors judge if the company in front of them has discovered a way forward.
Blank says he is going to address the issue in 2014. I've decided to do the same thing in Europe. Who wants to collaborate?