Ladies and Gentlemen, Open Your Checkbooks: It's Demo Day Season!
Now might be a good time to invest in Red Bull or Nissin (maker of Top Ramen). Consumption of both will likely spike as participants in various startup accelerator programs hustle toward their big end-of-session “Demo Day,” at which they will themselves seek investment.
This week is Y Combinator’s Demo Day (NetworkEffect will be in Mountain View, CA, on Tuesday for coverage of one of the sessions), followed by those of AngelPad, 500 Startups and Tech Stars New York in the coming weeks. Each will feature rapid-fire presentations from the hopeful founders of the Groupon of the enterprise, or Foursquare for moms, or the Gilt Groupe of gadgets, or AirBnB for dogs (I’m mostly kidding, but you get the idea).
Demo Days are intended to attract interest from press and investors and serve as a sort of culminating experience. But these days, companies have often launched or raised money along the way.
In the case of Y Combinator, the alpha dog of the accelerator programs, the 45 presenting start-ups have already been offered $150,000 in convertible debt from Yuri Milner and SV Angel’s new Start Fund, and most or all of them have taken it. (So perhaps they’re now sustaining their late-night coding binges with fancy noodles and exotic tea.)
Some think Start Fund’s copious check-writing will mean other angel investors will have less of a chance to invest in Y Combinator companies, as the extra cash will help the start-ups skip over angels and go straight to venture capital. And many early investors, including VCs like Charles River Ventures, have already forked over investments for some of the 45 new YC startups.
The funding scene is currently so competitive, many of these companies can get money when and if they want it. And we expect to hear angels, as usual, grumble about getting shut out of the best deals.
Participating founders take Demo Day very seriously. Earbits CEO Joey Flores, a current Y Combinator participant, wrote on Sunday in a blog post already viewed more than 15,000 times (the whole Y Combinator experience has become fetishized) that participating in the program is similar to joining the Marines.
It is crawling on your belly through mud with bullets whizzing over your head intense, with a looming deadline that feels like it’s going to make or break your entire existence… Everything you do between the starting of your company and that day will change how easy or difficult it is to raise money, and what value [investors] put on your company. Effectively, if YC is Marine Corps Boot Camp, Demo Day is the day we go on our first real mission with live enemy fire.
For context, the Y Combinator presentations this week will feature the six-year-old program’s largest class ever, and the first to be formally advised by new Y Combinator partner Paul Buchheit, the creator of Gmail and co-founder of FriendFeed. Buchheit joined Y Combinator from Facebook, which recently committed to giving the program’s companies special attention and resources.
Image via Flickr user GoonSquadSarah.