May 25, 2022

And a way to keep the deal flow alive

Download accelerators: More and more breaks on demo days. The often lucrative investor outreach activities for founders were part of the Y Combinator program, which is seen as the “end” of a startup’s journey.

But a demo day is not the best use of founders’ or investors’ time.

Many VCs who make deals with top YC startups actually do so before demo day. The hype surrounding the event makes investors so eager to get a deal early that they rush to the front and downplay the need for the event in the first place.

In an investment landscape that has changed dramatically in recent years, a demo day has become an age-old tradition. As capital flows increase, founders become more selective about the investors they attract—they aren’t looking for deep pockets or early closures; They seek mentorship, emotional support, and the undivided attention of investors.

We need to better understand why demo days are less frequent and how to find trades at a closer level.

Leaving the demo day alone will not help the founders find that value or attract investors. The direct variant (i.e. an event of a different format) will not work either. We need to better understand why demo days are less frequent and how to find trades at a closer level.

Demo day reduces investor engagement

Demo days are indicative. The founder stands on the stage and for about 30 minutes presents himself and his companies in the best possible light. But having the most impressive presentation or the most charismatic founder is not the same as having a real business solution or a well-managed company.

An article on The Nextweb already claims that VCs are “like Ponzi schemes” because investors often wonder, “Will this person give me money?” With a demo day that revolves around promotion, investors are forced to care more about companies’ growth potential and subsequent funding rounds than their actual mission. The focus on the look and the concept of betting on people turns the investment into gambling.

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