We’re often asked why we don’t host traditional demo days. There are many reasons, partly driven by the fact our accelerator model doesn’t involve classes, but we feel strongly about getting our companies funded by the highest caliber investors rather than creating artificial demand to promote quick decision-making and the highest valuation. That’s not to say we don’t like hosting events that bring together investors, founders and the greater hardware community (we try to put on a half-day conference twice a year, in the past we’ve focused on themes like Hardware 2.0 or the Internet of Things), but we prefer to expose our startups to the investor community on a targeted & semi-regular basis.
Since we invest on an ongoing basis (roughly 2 or 3 startups per quarter), it’s hard to pick an arbitrary date when all companies are ready to pitch. Our program is totally customized and will vary in length from 6-12 months (an industrial robot with 400 parts might take longer to prototype than a consumer hardware product). As a result, our startups begin their fundraise when they are ready — usually when they’ve developed functional prototype, have plans for production and can demonstrate some customer traction. By the time they’ve reached their pre-funding milestones, they’ve probably interacted with 15 or 20 investors through office hours who have seen them tweak and re-tweak business models, overcome technical challenges and hire a key employee or two.
We know that the best investment decisions are made when you are able to see progress over time rather than a random snapshot in time. (See: Invest in Lines, not Dots) Personally, I think back to my baseball days and the amateur draft. My least favorite scouting events were these high school summer showcases where you’d watch the top soon-to-be seniors in the country compete over 2 or 3 days. Everybody would get excited about the pitching prospect who touched 96 mph in his single inning to pitch and everybody would forget about the poor hitters that he struck out. Fortunately draft day was 10 months away and we still had ample opportunity to figure out whether this performance was more reflective of the best (or worst) day of a player’s life. A professional starting pitcher is going to face 800+ batters over the course of a season, while an every-day position player might accumulate 600 at-bats. Why would we ask our scouts to choose players after a single performance?