How important is a Demo Day really?

On September 4th, we at SigmaLabs will be hosting our fifth Demo Day, showcasing our outgoing Wave 5 early-stage companies: Born And Raised, DesignMatcher, Dokka, Dramaton, Eureka, and Real Drift.  Demo Day provides an excellent opportunity for our graduating startups to expose themselves to potential investors, immediately launching themselves onto a successful path.  Let’s delve a bit deeper into what Demo Day is, and why our Wave 5 startups have worked so hard preparing for it.

SL5

SigmaLabs wave #5

What is a Demo Day?

A Demo Day is essentially the graduation ceremony for companies in accelerator programs.  Each of the startups prepares and presents a brief pitch to an audience which includes venture capitalists, other potential investors, and industry leaders across many fields.  It is up to the accelerator to hype up the Demo Day and ensure that the seats are filled by individuals willing and ready to take the pitching startups to further success.  From the ability to secure new rounds of investment to the partnership and networking opportunities, Demo Days are immensely valuable to startup entrepreneurs.

The SigmaLabs Demo Day also gives us the opportunity to revel in the growth that each company in the wave has made during the months they spend in our program.  Some of the startups in our accelerator begin as little more an intriguing idea and a talented team.  Over the course of the program, ideas develop into useful products, and passionate entrepreneurs evolve into confident business men and women and sleek presenters.  When one of SigmaLabs’ startups nails its Demo Day pitch, not only does it propel that startup towards a successful fundraising round, but it fills us with tremendous pride in our shared accomplishment.

OQ DEMO DAY

Yadin Haut, CEO @ OptimalQ, 3rd wave DemoDay

What to expect from a Demo Day pitch?

Whereas startup pitches to investors typically last between one and two hours, the nature of Demo Day requires a much more truncated pitch – often just five to ten minutes long!  For this reason, SigmaLabs mentors work very closely and carefully with each company to refine their Demo Day pitches so they transfer the maximum amount of relevant information in an engaging way within the time constraints.  

Entrepreneurs are encouraged to craft a compelling narrative to drive the pitch:  Begin with a story that demonstrates the problem, then pivot to the company’s product which solves the problem. Describe the market for the solution and set a positive contrast between the company and its competitors.  Discuss the team members and their qualifications, all the while reinforcing an overarching vision for the future of the company and the market.

Overall, a successful Demo Day pitch will be passionate, compelling, and informative.  A pitch that contains all these elements will reflect well upon the presenters. Key Takeaway:  An impressive sales acumen sends a strong signal to investors that a group of entrepreneurs has what it takes to generate sales revenue and raise multiple funding rounds in the future, arguably the two most important factors venture capitalists consider when evaluating early-stage investment opportunities.

SUPRISE
Suprise!

How important is a Demo Day really?

There are those who argue that accelerators should do away with Demo Days.  Even after completing an accelerator program, a startup might still be too young to raise funds, and for entrepreneurs to dedicate time to constructing a Demo Day pitch instead of furthering their not-yet-mature product would be a waste of precious time and resources.  Furthermore, many venture capital investors, aware that the purpose of a Demo Day is to generate hype, actively make sure not to invest in companies until well after their graduation from an accelerator.  Finally, a bad Demo Day presentation could damage a company’s and entrepreneur’s reputation in the eyes of investors.  These arguments certainly have merit, and each entrepreneur should think critically about presenting during Demo Day if his or her product or presentation is not ready.

However, for most startups, the upside of a successful Demo Day presentation far outweighs the downside of a poor one.  Positive hype among investors about an entrepreneur’s venture will open up far more doors than negative hype would close.  Even considering the downsides, the platform to showcase one’s company’s product and progress in front of an attentive audience with deep pockets is not an opportunity to casually turn down! we should not forget most entrepreneurs get the “no” over e-mail and never get to speak to the investors, simply because the latter do not have enough time to review in scrutiny all requests. When thinking of the greatest value a Demo Day can provide these entrepreneurs we feel sometimes it might be the preparation. When you think about it, when gearing up for Demo Day the entrepreneur really nails down his 1-hour pitch, his elevator pitch (for the networking part), his slide deck & other materials (budget etc.) and most importantly, his value prop.

Still, it is important to understand that even a successful Demo Day pitch is not the end-all be-all for a startup.  Investors won’t be writing million dollar checks to entrepreneurs as they walk off the Demo Day stage.  The Demo Day pitch is still just a launching point for future pitch meetings with investors.  Entrepreneurs should expect to discuss their venture in great detail with investors after the pitch, and must be prepared to present a full-length pitch to venture capitalists with complete decks and financial spreadsheets as soon as the next hour!  The hype surrounding a good pitch does not last forever, so entrepreneurs must attempt to capitalize immediately following Demo Day.

 

GOOD LUCK

 

Overall, a Demo Day is the culmination of months of intense learning and training by startup founders in an accelerator, and presents a fantastic opportunity to embark on a successful fundraising round.  Although an impressive pitch does not necessarily promise a fruitful venture – nor does a poor pitch necessarily doom a startup to failure – Demo Day serves as an important benchmark in the growth of a previously undeveloped product into a thriving company.

ST DEMO DAY
Doron Nir, CEO @ StreamElement, 4th wave demoday

If you are an early stage investor and are not on our invite list please contact tair@sigmalabs.co

Special thanks to our interns: Linore Ben-Avraham and Ari Spitzer for assisting us with writing this blog post!

SigmaLabs