Yesterday I attended the TechStars Demo Day in NYC.
11 companies vying for start-up capital after an intensive incubation period – mentored by some of the best and brightest NYC has to offer.
Now over the years I’ve gone to many investment conferences and you can tell by the crowd where and when you want to be investing.
The 11 companies yesterday were looking to raise roughly $8M between the lot of them – and there were perhaps 400 people in the audience representing well over $1B in capital committments – perhaps a lot more.
Reminded me of a distressed debt conference I went to a few years ago toward the end of the cycle in 09 – too many people chasing too few great ideas.
When this happens – your best bet is to hunker down and sit on your hands – or fish in an entirely different pool.
One might argue that Techstars and other Demo Days are to some degree a celebration of the vibrant start-up community in NYC – and a great networking event – and bothy statements would be true. However, the bare fact of it is that everyone on the floor at Webster Hall yesterday was sitting there thinking about some angle, some strategy, some insight that would make each of the 11 companies the next big winner.
There have been lots of debates as to whether we are in a venture bubble or not. The companies demoing yesterday certainly weren’t asking for an outlandish amount of money – and the valuations for the ideas did not seem crazy (assuming they work!). What is difficult is the execution of such plans, when any engineer with an idea can get funded – rather than work to build a company for someone else. Why be employee #10 with a 2% stake and a salary, when you can give it a shot with a 33% stake.
It is pretty self limiting – because different investors are always going to find different things to like.
The things I liked might be things that other people hated – that’s what makes a market.
Supply and demand is a pretty easy equation.
Given the economics, it’s a lot better to have been on the stage than in the audience!