Takeaways from YC’s Demo Day Pitches — from an alumnus turned investor
With every new demo day I see, I notice some more recurring themes and small optimizations that could be made to the pitches.
This is because I’ve attended many demo days: first as an investor, then as a founder (W15), and finally as an alumni/investor. I know what Demo Day means for both the founders and the investors given that with Mission and Market we’ve also already invested in 18 YC companies.
The pitches are superb, especially considering they are put together in the last few days, and these are just notes on the few things that I think could be improved. I hope they can be helpful and valuable for eventual W17 participants.
0. YC is scary good
This is another stunning batch. I’m still equal parts impressed and scared at YC’s sustained quality and incalculable ROI potential.
I’m equally more impressed at the genius of YCVC’s LPs who continue to get an index of YC companies at a great price with zero effort. Kudos 👏.
1. Mismatch between founders and investors perspective
As for fundraising itself, pitching presents a unique problem in the fact that an entrepreneur only needs to create 1 pitch, but an investor needs to sit through 100+. This creates a misalignment of incentives, perspective, information, and so on.
The founder wants to explain the key things and biggest achievements, and only really thinks about their pitch. But so does every other founder.
A founder thinks that as long as their pitch is good they’re golden, but the reality is that founders should pay a bit more attention to how all their batch-mates are presenting their companies — to really get a feel of what it could be like from an investor’s perspective.
As YC’s average company quality keeps on rising, it means that getting noticed becomes harder and harder, because having a big market, great traction and a good team are now just baseline.
An investor might sit there and see dozens of high-quality pitches that check all of the thesis / sector boxes, but will probably only invest in 1–5 companies.
2. No originality
As a result from the point above, this year too, most pitches are all the same.
Numbers, LOIs, revenue potential “from just these customers”, $B market, perfect team for it, and so on.
- What the founder thinks: this is awesome, ticks all the boxes, yay me!
- What the investor thinks: yawn, this is the 50th I see today that says the same thing.
The problem with non original pitches is that, for me, as soon as I start to get excited about one for some reason, I’ll kick myself and say: “why didn’t you get excited about the other 30 with the same exact numbers?” “maybe this is just baseline and none are exceptional”.
There is much more to gain than to lose from spicing up the pitch and trying something no one in the batch will.
Comedy, videos, animations, personal story references, whatever would usually be a total no-go for a pitch, become fair game when pitching as one of 100 others. (There’s the classic problem of needing to be the first and only to do it, because 100 animated pitches are obviously much worse than 100 normal speeches).
3. Unrealistic numbers
I clearly remember at my first investor demo day a company announcing they would be making an insane amount (9 or 10 figures) in revenues that same year.
Now, I’m sure we’ll see such a company in my lifetime, but it is extremely unlikely that a company would be pitching for an investment in front of investors if they’re going to make that cash.
This makes me discount all of the other things the company says + a lot of what the other companies will say.
In general, it’s really easy now for me to tell which numbers are genuinely true and which ones are only the result of a super-short unsustainable hustle that is clearly pre-PMF — as much so as I almost remove from the equation traction altogether at this stage.
4. Very early companies
I don’t know if there have been a lot of pivots during the batch or if there were a lot of very young companies accepted, but I’ve found a lot of companies saying “after just 2 months” etc.
This is making it obviously amazingly hard to judge any of these and justify the valuations. Eg. “if you’ve been able to do all of this in just two months, and there doesn’t seem to be any unfair advantage anywhere, maybe a lot of other people could do that too”.
5. Stories work, big numbers don’t
I have clearly noticed that the pitches I get mostly excited about don’t start by saying: “we have X customers and Y revenue, and there are Z addressable customers”, but are the ones that take time to explain the story. They get me interested in the market, team, solution — something.
I much prefer getting a glimpse of the vision and mission rather than a sterile recount of numbers.
As the startup market gets more and more crowded, something I worry about a lot is how defensible a technology, brand, market positioning, or whatever really can be.
It seems to me this is not addressed enough and sometimes might cause me to judge a company too quickly because I’ve either seen many other companies do the same thing or worry it can be replicated by great and fast companies in adjacent markets.
Imho, these would be wisely invested seconds.
7. no UA
I still don’t think I’ve heard from one company how they acquire customers. We certainly didn’t explain it in our pitch, and I regret it. But in today’s environment that is the #1 thing I think of and the easiest reason to dismiss something “cool, but how in the world are they going to consistently and profitably acquire customers at scale?”.
I know 2.5 minutes isn’t a lot of time to give a full picture of company, but 20 seconds to tell me about an edge acquiring customers can make all the difference.
- I unfortunately wasn’t able to attend live this year, so I watched all presentation videos online (thanks YC!). I must say that I have really enjoyed the confort of watching the videos from my own couch at my pace, researching the company and the founders online at the same time, while stopping and resuming. I also had the privilege of having my two partners at the event who could ask the questions that came up and round details which made it the perfect setup. I highly suggest it.)