Startup accelerators are growing in popularity and demand throughout the world with the increase in the number of startups globally. Almost every accelerator program that offers various amenities for the startups end with the final Demo Day. A Demo Day is an event where the graduating startups or the young entrepreneurs present their fully molded business plans to the prospective investors to raise funds.
The Demo Days are open to investors, relevant industry leaders and other entrepreneurs who are part of the accelerator’s network. At best, it is a display of new and interesting startups. At worst, it is a collage of meaningless big numbers, immature promises to change the world and unrealistic sales pitches. In any way, it is a performance, meant to keep energy high and investors intrigued. The event usually involves live multimedia presentations by the founders, followed by internal networking event where the graduating startup founders and attendees can meet. The day is crucial for every startup that graduate from the accelerator program. If the day goes well for a startup, it can lead to rapid funding of their company and numerous business networks, assuring a strong position in the market.
The ultimate goal of an accelerator’s demo day is to secure venture capital funds for its graduating batch of startup companies. Since the JOBS Act, which was passed in 2012 to further democratize startups’ access to capital, has freed the rules around general solicitation, many startups opening beg by ending their presentations with slides like ‘we need this much and have already raised this much. To help us reach the rest, talk to us afterwards.’
However, despite the fund-raising, the other main goal of the demo day is to promote the accelerator themselves and to market and justify their existence. Quite recently, accelerators have gone through a phase of skepticism and doubt. The early success of Silicon Valley’s most renowned accelerator Y Combinator produced mass copycat programs around the country with differences in the quality offered. But Y Combinator failed to replicate its early success with Dropbox and Airbnb. In 2012, the accelerator scaled back its program, making a note that it had risen too fast.
The event starts with the formal welcome speech to address the gatherings and followed by the startup entrepreneurs to present their company to the gathered crowd. Generally it is in an open gathering, but in some accelerator program like Oxygen the graduating entrepreneurs are made to pitch-in in an intimate room where investors have the chance to ask in-depth questions for a better understanding. The entrepreneurs get a chance to pitch to 3 to 4 different groups of investors in succession, giving one in-depth exposure to a wider group and also ensuring that the investors who are interested can have more time with those startups. At Oxygen, the graduating entrepreneurs are given another chance to pitch in to a public audience at the grand finale showcase event.
In other accelerator programs, the event is more open where the participants are given not more than five minutes to pitch and followed by the short Q&A session from the audience. Once the formal presentation is over, the real meeting of the startups and the prospective investors happen to raise funds. Food and drinks are served during the event for the participants and the guests.
The demo day end with the grand finale of declaring the startups and the funds raised by them on the day. Apart from raising funds, the demo day gives the companies a change to mingle with the prospective investors and understand their wants better. It also allows the startups to get more interesting business connections and networks. In general, demo day is a one day program but for some it may even last up to three days. It is a day to portray the real world after vigorous training for three months.
Demo Day events are widely covered by the press, both national and local and numerous bloggers. These days have been a staple of the startup and early-stage VC ecosystem for almost a decade.