Demo Day vs. Investor Day @Techstars Boston

The rubber is about to hit the road. It’s like a Bar Mitzvah, Debutante Ball, and college Commencement Day all rolled up into one.  Demo Day, where the companies nervously and/or proudly strut their stuff for the assembled press and public. Insiders have already found their favorite companies and backed them–that’s one of the great advantages for being a mentor, is getting to know the companies in an intimate way that makes for far more informed investing decisions than is normally possible. We’re opening up Demo Day to a big crowd this year–you probably can still get tickets here for the event starting 5pm on Tuesday, 9/1. Like always, it will be one of the highlights of the year for the Boston startup crowd. As a reminder, here’s the list of the killer companies who will be pitching.

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But the insider view is necessarily restricted–at Techstars we are super picky on which mentors we take on, and the companies are too busy building their companies to just be chasing dollars during the program–so Demo Day IS a big deal to meet the big community.  But there are problems with it.

First, time is limited. Institutional investors generally need lots of time to suss things out, and they ask different questions than, say, the press; equally important, VCs act differently than angels. So while Demo Day is an intro, it’s rare to have checks appear on the spot, and it’s wise for companies that get such offers to not accept them on the spot.

Thus, the main goal for most companies presenting at Demo Day is to gather up as much of an interested group for a second meeting as possible. This also creates a type of forcing function so that those investor meetings don’t slow down the company from its real work. Techstars builds an app for each Demo Day where potential investors indicate their interest and desire to follow up. The CEO for each company then gathers that interest, decides on who to follow up with, and takes it from there, often closing a round within a month. (It should be noted that most often the companies have commitments going into Demo Day of 1/3rd to 1/2 of their desired raise already circled from early investors.)

We’ve started a separate “Investor Day” approach in Boston, trying to recognize the gap between the privileged folks like mentors who have been able to spend quality time already with the companies–and first time viewers. Companies can’t actually solicit investments onstage during Demo Day because of SEC regulations limiting solicitations to qualified investors only, so information is constrained at Demo Day. Hence the need for Investor Day.

To create a deeper discussion, Investor Day has more time allowed. We are creating several (7? I’m not actually up to speed on details) rooms with a handful of investors in each. The companies rotate through the rooms, where after a quick pitch, investors start peppering the teams with questions. Thus, consider it more like small group meetings. While the pitches and Demo Day itself are all about displaying beauty, the Q&A can be used by the investors to look for problems, meet more of the founding team, and see how the teams think on their feet.

This is the first time we’ve formalized an Investor Day in Boston (Techstars Boulder was the first to use this,) but my guess is that this innovation is a keeper. We’ll soon find out how to make it better, and we’re eager to give the idea a try.

On a personal aside, I’ve not blogged much in the past month because of personal health reasons, and I’m expecting to keep the pace slow over the next three months. Those friends who want to learn more can get the scoop here.


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