DEMO is here in just a few hours, and we are happy, but thousands will leave this conference disappointed and ready to close shop.
The conference now in its second year running brings together best startup entrepreneurs from across the continent, to come and launch their startups before a group of investors and media.
However, it might not be as rosy as it appears.
There are 40 ventures competing for just five slots and begging for the attention of a few investors, many of them already skeptical of their businesses. As a founder, one is likely to get frustrated if they don’t end up among the lucky five, I would cry too if I didn’t.
Prepping all night for months, foregoing family, missing sleep and pausing Breaking Bad and avoiding partying friends for months is a recipe to suicide if an entrepreneur goes back home with just a handful business cards instead of a series A. They have debts to pay, for technology, office and the money they raise from family. Some of them end up hating such conferences thinking they are a fraud. Worse, some will take angel investors and VCs personal if they ignore to pass by their stands or attend their pitch sessions.
Talking to Mbwana Alliy of Savannah Fund recently, I realize why such situations are highly expected to happen.
Diligent homework
“Investors who come here are not amateurs, though some of them might be. However, every good investor should have done their homework months before DEMO, to find out more about a startup before the event,” he said. “But I believe most of the investors who will be here know these companies and they should have invested already if they were impressive. We have all been invited but no one can decide for others where to invest.”
Great to reconnect
According to Alliy, such conferences are great for meet and greet. “They keep the conversations going and connections active and founders can use them to get feedback from investors. It’s like oiling a relationship.”
Founders discuss with investors what is working for them since they last met, building their relationship.
Among the 40 finalists, DEMO funding will go to the top five whose traction, team and scalability would be proven. Like any other business, VC’s and investors put money into business for profit. Working hard just to make it to DEMO is not a guarantee of a billion-dollar investment. Investors want to see in the team a future, with or without funding. This doesn’t mean DEMO is not helpful. Just sneak preview of what last year’s class has achieved, two finalists have raised several surrounds of funding, some of them in millions.
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“Some teams are so good at pitching, yet have a crappy product,” said Mbwana. “And there are others who have a great product but are poor at pitching, may be due to lack of exposure. “
Product and presentation
Please, be none of the above, having a crappy product will kill you and being so poor at pitching will kill you quick. If you can hire a coach to train you overnight on doing great pitches, do it. If it’s about your product, get the best developer or designer on deadline even if it’s from O-desk.
“Suppose you don’t secure funding? Will you close shop? Yes you need the funding. But show the investors what you need the funding for, and show them had it not been for that expansion or etc show them (don’t tell) you can run without their money but if it comes, it will be jet fuel you need to accelerate. Having a passionate goal and a dedicated team helps, but the product has to be awesome first-either it meets the needs of an enterprise or a particular consumer need.
Do not run behind your time
Apart from a dedicated team, the timing of the business should be considered. M-Pesa could not be conceived without mobile phones. Being future minded pays but do not be ahead or behind your time. It would be cumbersome building payphones when everyone is buying their second and third mobile device.
Cost
Affordability should give your idea a great leap forward. Affordability of the product’s equipment and technology by the company and affordability of the end product by the buyer, if you can’t afford the technology to build your gadget, or the parts aren’t available, then you are in trouble. Not being cheap but affordable is what everyone wants. Depends on your target market. If you are building for poor folks or for masses, cost is key. For those building for rural population’s simplicity and battery power is key.
Durability
Facebook’s Mark Zuckerberg had a culture at Facebook that allowed guys to experiment without fear. Moving fast and breaking things is great, but not behind the podium as you DEMO your app. The last time your app or code or whatever should break is in-house before you come out to the public. And if you are manufacturing glass which can’t withstand a drop of water then shouldn’t be doing so.
Customers and the bandwagon effect
Do you have customers? Having an app or startup business without customers before you launch is grave. You should have pre-orders just like Samsung and Apple does. Yes, everyone is doing so on Kickstarter and Indiegogo. Kenyans own BRCK had pre-orders before production began. Customers validate your idea in that week one. They show an existing problem that’s why they buy and they will complain if it crashes and might never come back. Remember-one domino goes, all dominoes go, they move in groups. Clients build a community around your business, they create a social proof, no one acts as an isolated individual, the negative results of such group theory is mob justice-united in anger.
Launch is the start not exit
“If I don’t invest in anyone at DEMO, it doesn’t mean it’s the end of them. Founders should value great feedback from VC’s and the public and go back to implement it. It will also be great opportunity to connect. I may not have met everyone, especially those from Egypt and this might be the best time to connect and probably spark interest. Investing is like dating, you have to invest time into it till marriage, that’s why we do due diligence, not just impulse investing,” Alliy concluded.
So have fun, DEMO is time to mingle with VC’s and other entrepreneurs. Court the media too; especially those who will make you sweat. Talk to customers, bloggers and VC’s who say your idea is crappy, listen, and go back to the garage for fine tuning.
However, failing to secure funding at DEMO shouldn’t be a reason for a startup to close shop, go back to the never lying bootstrapping.
