Last month, while attending a Demo Day for a national accelerator program, I became distracted at the end of the presentation.
It wasn’t that the startups presenting were boring–far from it. What pulled my attention away from the stage was the rapid attrition of audience members.
They were investors and VCs, and they exited the room like fans leaving a baseball game in the bottom of the 8th inning to beat the traffic–while missing out on a chance to meet the players.
There were two reasons, I later learned. The first option was they’d made a snap judgment, based on the five-minute presentations by each startup, and didn’t want to stick around longer to chat with the entrepreneurs. The second was that even if they found one of the companies intriguing, it wasn’t worth their time and effort to jostle for a follow-up conversation with the other 500 people in attendance.
The concept of having startup companies present to a large audience of potential investors is based on the idea that’s it’s an efficient use of time for these in-demand, time-pressured individuals, especially if they’re flying into town just for one day. It’s a good bang for the buck to view a batch of young companies all at once. If they’re really interested in a startup but don’t get to meet the founders in person, the thought goes, they’ll follow up later on their own.
Certainly there’s also value in this Demo Day format for the entrepreneurs themselves–it gives a point of focus for the end of a program, helping the founders hone their pitch and presentation style, and get cleaner and clearer on their value proposition, strategy, and business plan.
But after seeing enough startup cattle calls, and after talking to investors who say they’re fatiguing on the entire experience, we at Invoke Labs have moved away from the traditional pitch-and-dash Demo Day format. It’s not that we’ve eliminated the idea entirely; rather, we’ve evolved the process to include a more personalized approach that has proven to be more effective when it comes to educating investors and entrepreneurs about finding the right fit for one another.
As an investor, you want to believe in the team and in their idea. Five minutes up on a stage won’t tell you that–it just tells you if the founder is a great presenter or not. I’ve had established, proven investors tell me they’ve given up on the Demo Day format. The ROI is just not there.
I’ve also seen a trend in investors making macro-judgements–“Oh, I don’t like that vertical of health care/retail/social”–and then pass on it too quickly, rather than getting to know the team and idea behind it, especially when that team is smashing vertical models or barriers.
At Invoke Labs, we invite individual investors into our office and select a handful of companies to meet with them, rather than presenting an entire cohort at once. If we’re doing our job right, we’re able to curate high-quality investment opportunities for high-quality investors.
In other words, we’re practicing what we all preach to our startups: Know thy customer, curate the experience, deliver outstanding value.
We book out 30 minutes to an hour, giving the option for the investor to dig deep–or to pull the rip cord if they’re not interested. While this amount of time might seem like a luxury, I see it as a value assessment on the part of the incubator or accelerator.
If you have a good relationship with your investors, you’ll be able to know which three out of 10 companies they can meet with that will make the visit worth their while. Isn’t it a better use of time to spend an hour on three quality meetings, versus an hour on 10 high-level, bite-size pitch decks?
We’ve gotten great feedback from investors with this approach. We present them with startups in the right place at the right time, so they’re able to more accurately consider a potential investment.
I don’t imagine the traditional Demo Day format will disappear entirely, and it shouldn’t. There’s the marketing and promotional side benefit of having a large public audience, and some incubators and startups will still opt for reaching as many people as possible, even if they can’t go quite as deep. But what we’ve found and put into practice is the opportunity for an alternative, more considered approach.
Incubators and accelerators have changed the early stage startup and investment landscape. In doing so, they changed the approach to entrepreneur and investor connections and matching. It’s time to evolve that model, optimize it for both, and accelerate great capital into amazing companies to speed innovation and wealth creation.
[Image: Flickr user Niko Pettersen]