Demo Day Metrics (Batch 1)
Written by Lee Lin, Co-founder & Partner of Lair East Labs
Startups raising a seed round from angel investors and early-stage VCs must demonstrate an encouraging level of traction. At the seed stage, there often won’t be revenues or a fully complete product. Even if there are paying users, they are rarely the critical metric. Smart founders use their early customers to gain feedback for their product roadmap, not to maximize profits.
For the Lair East Labs Summer 2017 batch, we were careful to guide each company to the correct Demo Day metric, specific to their most pressing goals.
Eximchain: Blockchain companies are still very foreign concepts to most angel investors, both in terms of what they do and how to properly structure an investment. In the weeks leading to Demo Day in Beijing, we had Eximchain founders, Hope Liu, and Juan Huertas, restructure into appropriate legal entities based in Singapore and the Cayman Islands holding company (we defer to the experts in the blockchain community). We modified the default SAFE templates to include token sale events as qualified financing events. Lastly, we begged Hope to simplify their product presentation as much as possible. People won’t invest if they do not understand how smart contracts can solve many problems found today in supply chain transactions.
Latest Update: Within two months of our demo day, Eximchain raised 175 BTC, worth $2M USD as of 12/4/2017.
Lemon2ade: Hardware and retail plays are both notoriously heavy on business development, in addition to any software complexities required for innovating the merchandise. The most important metric here is a successful prototype or demo unit, which shows both investors what you are building, and that your team is competent enough to build it. From the very first day, we told the founders to expedite the manufacture and delivery of the prototype units so we could have them ready to show with as much polish as possible by Demo Day. For bonus points, they could gather evidence of demand from retail and commercial venues interested in deployment, and manufacturers interested in partnerships.
Latest Update: Lemon2ade successfully deployed two functional machines in one of the largest malls in Flushing, New York, with strong interest from other venues. The machines are earning revenues and projected to repay the full cost of manufacturing and shipping within 6 months. Lemon2ade has also partnered with a manufacturer who will produce 20 more booths.
Goop: Consumer mobile apps have the easiest traction to measure at almost any stage: user and engagement growth. We advised team Goop to launch as early as possible because a team of smart engineers will often launch too late (a combination of nervousness and perfectionist tendencies). Before we even arrived in Beijing, the Goop app was available in the iOS App Store, and during their presentation and all the mingling sessions afterward, founders Jeff, Jonathon, and Peter could easily tell interested parties to simply give it a spin!
Latest Update: Goop launched at HKU in early September 2017 and rapidly expanded to other colleges and grad schools in Hong Kong. Within 3 months, they reached 1000 registered users.
Superfine Games: Game studios are unique companies because there are multiple strategies to pursue. Some games rely on heavy financing or publisher backing, and other games work best as part of the indie community. During the summer, we knew Kathy Fung was a very experienced indie game developer with multiple games topping App Store charts in the past. In her case, the most important metrics in demo day were to showcase a solid team and a story for how the new game seizes on a unique opportunity. In this case, ARKit was launching with iOS 11 slated for September 2017, and Kathy would be among the first high production value ARKit pet simulations.
Latest Update: Shortly after demo day, we introduced a team to create the trailer for Tiny Sheep AR, and also helped re-structure the cap table for adding a key co-founder to the team. They are hard at work putting finishing touches to the game, and you will be able to play publicly after their holiday launch!
-Lee Lin, Co-founder & Partner of Lair East Labs