“Look these guys who created this program know exactly what they are doing,” a founder from one of TechStars NY first graduating class told Betabeat. “It’s a well oiled investment machine. Yes, Techstars is in some way altruistic, ok, it supports entrepreneurs. But the people involved also get the first bite when it comes to investing in these companies.”
Everyone who attended the lunch session after the presentations at Demo Day could feel the energy in the room. Founders were swarmed by investors while Bloomberg TV camera crews captured the action. A whispered interaction would suddenly become the center of attention as it was lit from multiple angles and a boom mike dropped a few inches above the conversation.
“The program does an amazing job teaching entrepreneurs how to create a compelling case,” the founder and alum continued. “The atmosphere of the day and the sense of a tight time frame creates this sense of urgency among investors. They think, ‘Shit, if I don’t get in, somebody else will!’”
Hyperpublic founder and Lerer Ventures partner Jordan Cooper penned a post today, The Downside of “Demo Day”, which weighed in on what he sees as the drawbacks of a blowout climax for an accelerator program like TechStars. “Big VC’s and dilettante angels alike approach demo days as though they are going to the supermarket. They listen to thirty 2-10 minute presentations and then are encouraged to “pick one or two” from the batch. The session breaks, founders and investors are thrown into a room together, and investors walk around committing $100K checks to their “favorites.” What a terrible way to enter into a 5 year partnership.”
Dogpatch NYC’s entrepreneur in residence Matt Meeker concurred, writing that, “I understand the thrill for young entrepreneurs when someone wants to hand them a sizable check after 15 minutes. It validates them in a measurable way. It also tells them that all the hard work they put into the pitch led to the reward they were hoping for, in record time no less. But for many, it will end up costing them in countless ways as their business goes forward.”
For some of the start-ups at TechStars this past week, resisting temptation was the biggest challenge and the best lesson. “When people are coming up to you and talking about millions of dollars, it’s easy to get crazy,” says Reece Pacheco, who presented at TechStars NY for his startup, Shelby.tv. “But from spending time with more mature companies and from talking with our mentors, I knew that kind of funding wouldn’t make anyone happy five years down the road.”