If you check out seed accelerators for long enough, you’ll come across one relatively consistent criticism. (Particularly for the lower quality programs, I have to say.) That criticism is that accelerators focus way too much on Demo Day. I believe that founders that say this don’t understand the real “why” behind the preparation.
I joined Techstars at the beginning of June this year, and in that time have seen the preparations for the Demo Days of the Techstars London 2014 batch of companies, as well as the first Barclays Accelerator batch of companies. So I’ve already seen, up-close-and-personal, two cycles of companies spending time and getting ready to pitch at Demo Day. And Demo Day is important: there are hundreds of angels and institutional investors there and it’s a once-in-a-lifetime opportunity for most companies. They need to work hard to make the most of the opportunity.
But the subtle secret about preparing for Demo Day is that it’s not just about one 5-minute pitch, it’s a month of deep critical-thinking about how to communicate a product, a company, a market, a team, and an opportunity. Sure, the direct output is that 5-minute pitch, but founders learn how to give a one-line description of what they do, an elevator pitch about their company, and how to talk about the company in ways that really resonate with a particular audience. This process, and particularly the feedback from experienced entrepreneurs and mentors, is critical to founders. (And while it involves the whole team, it should only be the day-to-day job of the CEO, leaving everyone else to continue working on the company.)
Let me give two examples from the Barclays program:
ClauseMatch — Evgeny from ClauseMatch was not a natural speaker, and his company (a platform for contract negotiation) is in the legal world, which tends to make peoples’ eyes glaze over. And at times, he struggled to communicate how revolutionary their product is. But he cracked it with a simple (and amusing) anecdote to start his Demo Day pitch. He took the audience back to 1995, when Microsoft Word introduced “Track changes” and e-mail started to become widely introduced. For the first time, instead of faxing manually annotated contracts back-and-forth, lawyers could e-mail Word files back and forth… it was a revolution. Then he made a simple statement: after twenty years of internet and cloud technology development, lawyers are still working the exact same way. It was a massive “a-ha” moment for the audience that grabbed their attention for the rest of his pitch.
GustPay — Werner from GustPay actually spent a bit of time at the start of his pitch talking about Disney… specifically about the NFC wristbands that Disney has developed for their theme parks. He talked about the “magic” of the experience, in that the wristband becomes their ticket and their wallet and their room key, and everything they need for their stay. Then he told the audience that Disney spent >$1billion in developing this technology, but GustPay provides the same experience for venues and events for just $1/wristband. Again, it was an “a-ha” moment that got people to recognise what they did, and why it was important.
Being able to communicate your startup to a wide variety of audiences (investors, early adopters, sales prospects, press) takes a lot of hard work. And while it may seem all that hard work is just in service of a 5-minute pitch, the real benefit is far, far beyond that.