The Eight Tips For a Successful Demo for Investors
Hemi Startup Series - Product
When I worked for a startup, I always bore the responsibility of showing our demo to investors. There was always something unexpected that happened: the projector didn’t work; an email reminder came in; a bug showed up. I always joked about myself as a demo killer.
When I became an early stage investor, I realized the importance of a successful demo. Experienced investors always use demos as a way to learn the progress of a startup, interact with the founders and ask the hard questions. Then, they will gather all the information from the demo to help drive an investment decision. For founders who come from an engineering background, the demo is more so a mini-marketing event, which needs to be customized and curated to facilitate a great fundraising.
Besides a private demo, a public demo is also very important. As accelerator and incubator demo days come into full swing, many startups are preparing to experience a right of passage: the on-stage demo. Companies hack some tech together, face the fear of public speaking and hope to get out of it in one piece. Some companies blow it out of the water, leading to increased momentum (ie. Pied Piper @ TechCrunch Disrupt showcasing its middle-out compression) Others are absolute disasters and miss the best opportunity to attract a large crowd of potential investors.
The idea of this article was conceived in a brainstorming session during one of our weekly investment meetings. As everything turns out to be, preparation is always the most important thing.
Care that you are moving forward your tech — the more you are able to build and show, the more you are able to de-risk the investment for investors. Show that you are already making progress and present a timeline towards the future of when a MVP/beta product will be available for customers.
So here are eight quick tips for technical founders to make sure a technology demo is successful for investors. It’s not a secret formula to raise money; it’s a basic walkthrough to avoid a disaster demo that will close the door.
Before the demo:
• Rule 1: Have a clear goal
Demos are all about planting the vision into the investors’ minds. What do you want to show the investors: is it about the process, or is it about the result? Is it about what the team has already achieved? or is it about the expectation of what is going to be built? Demos vary from day to day. For the early stage, it is rather difficult because most things are not fully developed. However, being able to combine the reality and the future and effectively communicate that with the investors is very important. The goal of a demo is always to draw a graph in the investor’s mind about what they are investing in. Of course, there is a gap between now and the future, but being able to show what you have now is the key to the future.
• Rule 2: Write out a step-by-step roadmap (on a piece of paper)
It may not sound high tech, but trust me, paper is the most viable way to deliver information. Investors usually see a lot of demos in a week. With a piece of paper, you make a difference by showing that you are confident and prepared. The roadmap should include a list of different scenarios specifying clear input and output. During the demo, if there are a lot of moving parts, investor attention will be spread between a variety of things; it becomes hard to comprehend what you are trying to show. By having a clear roadmap, even when things are moving around, there is always something that investors can follow.
• Rule 3: A backup plan
Code, internet, things don’t work — When demo is not working, could you just talk through it? Preparing a video of your project will show investors that your demo is working. Remember the most important thing is drawing a future for investors. Any methods that lead to that end goal will work.
• Rule 4: Practice, practice, practice
Heard the rumors on how many times Steve Jobs practiced for the WWDC demo? Yea. That kind of dedication is required for your demo as well. Count the time and have things ready to go — the worst is waiting for 5 minutes for the CPU to boot and the program to run. Have things ready so that there is no wasted time. One great example I always remember is a well executed demo done by Point One Navigation, one of our self-driving portfolios. They were going to demo their newest technology in April this year in a self-driving racing event in Thunderhill Raceway Park, west of Willow, California. Aaron, the CEO, and his team spent the full day before the event, mapping the race trail by driving on the venue round after round. They were the winners of that event, which historically has always gained a large attendance by investors in the industry.
• Rule 5: Follow a roadmap with clear instructions
Structure is important. Being serious during the demo is important as well. Before each part of the demo, describe what you are showing and why it matters. If the investors are new to what you are doing, a brief introduction to the technology is crucial. Write down feedback and questions from the investors so that you can improve and integrate comments with your next version. This is especially important for new generation technologies such as self driving cars, which Hemi has been focusing on. Sitting in a car is only the beginning, and being able to explain why the steering wheel works by itself is way more important. If the guidelines are clear enough, not only the founders, but everyone in the company will be able to do it (save your time!).
• Rule 6: Make sure to compare your product to industry standards and explain why your product is better
One thing investors always look for is differentiation. Being able to demo the uniqueness of your product or technology is important. Even better — if you can show your significance by comparing your product with competitors during the demo, that will open peoples’ eyes.
• Rule 7: Short and Sweet
A good demo can be done in 5 to 10 minutes. Point out the most important pieces instead of thinking about showing everything. You don’t need to show everything. Tease the investors, instead of pitching to them. One good sign is a lot of follow-up questions after the demo. A demo is only a start — not the end.
• Rule 8: Follow-up email
The most ignored piece is following up after a demo: provide a thank you letter with the video (the one you previously made as a backup) so that investors can remember the demo and go over things that they might have missed/ weren’t clear. Ask for feedback on what you can do better to show you learn fast. That’s how a startup can evolve.
These eight tips are only a brief summary of what we, former startup operators prior to Hemi, learned from our own experience and mistakes. A demo is not make or break — experienced investors will not be bothered by a bad demo, but a great demo will increase the likelihood of advancing to the next level of conversation. Win after win is what matters most. And let’s start from the demo.