We recently opened applications for Ignite’s new startup accelerator programme. Now in our fourth year, we’ve decided to change key aspects of the programme to create better value for the 25 teams that will join us. We’ll be investing a flat $30,000 per team in return for 6% to 9% equity; longer programmes (up to 18 weeks); overlapping cohorts to ensure new teams are always learning from alumni.
And we’re scrapping demo days.
This last one is a pretty big deal. Demo days and pitching are integral to the accelerator model, and have been since their inception. YCombinator, Techstars — in fact, name any accelerator programme and you’ll find a demo day bringing up the rear.
The point of demo day is, ultimately, to ensure startups are exposed to enough investors to ensure deals occur. It’s the very definition of spray-and-pray — cram enough investors into a room and someone is bound to part with their cash, right? In that respect, scrapping such a critical event seems shortsighted at best.
Reality is at odds with the theory, however. While eight of the 10 teams to complete Ignite’s 2013 programme are currently closing seed rounds, the founders are raising from VCs and investors they met before or during the programme, rather than through demo day. This isn’t an abnormality, in fact it’s been the norm since we started.
It isn’t that the skills learnt for demo day are unimportant, because every business should be able to articulate its vision, tell its story, engage investors and audiences alike. The issue is context; a demo day achieves little beyond proving a founder can deliver a slick slide-deck based on a tried-and-tested, and very tired formula.
Demo days are beauty parades, they’re style over substance. They exist as much for the benefit of the management as they do for the teams — they’re a calming reassurance that everything turned out fine in the end. Every founder is amazing, every business is investable; every startup is dipped in chocolate, covered in sprinkles and polished within an inch of its life — regardless of the quality of the business or the strength of the team.
The truth is nobody does deals on demo day, and if investors are only hearing about an innovative business on the day in question, then the programme management have failed. Besides, most fund managers and angels have their favourite events and disregard the rest; the finale of a team’s journey through one of the most challenging periods of their lives can suddenly fall flat in a half-empty room.
There are fundamental issues from a team’s point of view. One founder must write scripts, design slides, be coached within an inch of their lives, practice once or more a day, every day for weeks. At the same time, programme managers demand teams double-down on their efforts to build a business. For a team of just two or three founders, being expected to be investment-ready whilst simultaneously preparing for demo day effectively ties a hand behind their backs.
So is there a better way?
There still needs to be a deadline for teams to meet. It ensures focus; teams must put their energies into nailing customer validation and market fit, testing assumptions, iterating and improving, building some functional, tangible element of their product that embodies their understanding of a problem and how they intend to deliver the solution. Without that deadline, startups can procrastinate, putting off that critical all-nighter or that extra sales call to a potential client.
We were inspired by one of our investors, who last year performed his own experiment. Feeling the London tech investment scene was more fragmented than anyone realised, Doug Scott arranged (and attended) a series of 13 lunches over consecutive days, each attended by over 20 VCs, angel investors and other guests from his address book. The result? Every day, a roomful of people made new contacts, discussed portfolios and opportunities and expanded their own personal and professional networks.
So instead of herding 100 people into a dark room, we’re going to try a similar experiment; we’ll hold a series of lunches in London, perhaps over two or three days — for founders, investors and invited guests. Teams will still need to convey their stories, they’ll still need to demonstrate their prototypes, but these events will provide the opportunity for relationships to be further explored and strengthened in a more intimate, informal setting. There’ll be a finite amount of invites available — no more spray and pray — and instead of robbing investors of up to half of their workday, a lunch better-fits with their daily routine.
All of the skills required for a pitching — the art of storytelling, preparing a deck, presentation techniques — they’re still incredibly important for founders to learn and master, and they’ll still play an integral part of our programmes. It just won’t be every day. For five weeks straight.
Will it work? The honest answer is that we don’t know. We’re convinced that focussing on relationships is the right way to go, but like the startups we mentor and encourage to experiment, we won’t know the true outcome until we try. In that respect, we’re asking no more of ourselves than we ask of our teams. No, we’re not YCombinator, but that doesn’t mean we should be afraid to challenge the status quo; perhaps it’s time that more programmes practiced what they preached.
Applications for our Summer programme are now open — or you can email us at hello@ignite100.co.uk.