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4 Common Mistakes Founders Make When Giving Demos to Investors
The majority of seed-stage fundraising pitches I experience include some sort of product demo. The type of demo ranges — products can be anywhere from relatively raw, to ones that are live but fairly basic, to pre-launch alphas or rough prototypes. Regardless of the maturity of the product, I’ve found that the majority of these demos end up being relatively unproductive for the founders.
While a lot of ink has been spilled about how to construct a good fundraising pitch (which usually includes a demo), there has been relatively little discussion about the demo itself.
But the demo can often make or break a pitch — especially for founders building products to redesign the Everyday Economy. When you’re trying to build something transformative but are just starting out, your demo (should you choose to include one) should crack the door open and instill confidence that stellar things are ahead for your product and your company.
So, here are the four most common mistakes I tend to see with fundraising demos, and some thoughts on how to address them.
Mistake #1: The Random Walk
Most demos feel kind of like a random walk. I get the sense that the founder knows they are supposed to include a demo in their pitch, and so they include some time for it.
But then it seems like the demo itself is not at all rehearsed and is all over the place. You’d be surprised how often during demos I hear founders say to themselves “hmm … let’s see … what else can I show you?”
Your demo should not be a random walk. It should have a very specific purpose, usually to highlight something positive and important. I like to say that the demo should elicit 1 or 2 exclamation marks. These include:
- Woah, this team really obsesses over great design!
- Woah, what that product just did was magical!
- This founder is really resourceful. How did they get that done when they aren’t technical and have raised so little money?!
- That onboarding flow/viral loop is amazingly good!
The risk of meandering is especially present when you allow the investor to “drive” the demo. While it seems cool to have an investor just play around with the product, you really only want to let the investor “drive” if a) it’s a consumer social product and/or b) it’s a 1:1 meeting. For everything else, it’s better if the founder drives the demo themselves. The exception around consumer social is that I think that great products and unique interactions are hard to experience as a third party. You just need to touch and feel the product yourself to appreciate it if it’s good or really really special.
You don’t want to go through the rigmarole of a demo if you don’t think the investor will be wowed by something you are showing.
Create exclamation marks or rethink whether you should do a demo at all.
Mistake #2: The Time Warp
Managing the timing of a demo is pretty tricky. You usually don’t want to spend forever on it — you want to get to your exclamation points quickly, land the punch line, and then wrap.
I find that most demos have fairly awkward timing, for two easy-to-fix reasons:
1) Taking too long to get to the meat of the problem.
The first is taking too long to get into the meat of the product. It’s amazing to me how often I find that demos start with some sort of very generic initial flow that tells you nothing about the quality of the product or team other than that they have built something that 99% of other products also have.
If you are going to show a sign-up and onboarding flow, it should be because you think there is an exclamation point associated with it.
Otherwise, skip it and move on. I highly suggest having a few tabs open prior to the start of the pitch. This way, you can jump in wherever you want to or shift to the parts of a flow that are really interesting if the investor’s attention starts to wane.
2) Moving too quickly through the good stuff.
The opposite problem here is moving so quickly that it’s tough for the investor to feel like they have their bearings and actually appreciate the good stuff that you are showing. Also, if you have practiced your demo or given it a bunch of times, it’s easy to forget what it’s like to see your product for the first time.
So, when you get to your first important screen, pause, and talk through what the investor is looking at. Start with who the user is supposed to be, so they can put themselves in those shoes. Talk through the relevant parts of the page so they have some baseline understanding of what they are looking at and where everything is. It may feel tedious to use precious time to lay that groundwork, but you’ll find that you can start to move more quickly after establishing this sort of baseline.
Mistake #3: The Buggy Demo
There is a law of the universe that says that demos done in front of investors will fail proportionate to the importance of the pitch.
It’s like entropy — you can’t really fight it, so you need to ensure against it. Have a backup plan in the event that something goes wrong. Have a backup connectivity option in case there are wifi issues in the VC’s office. Have your own dongles to connect in case the investor doesn’t have a compatible one on hand. Have the demo ready to go on a backup machine in the case that yours craps out.
Some founders have effectively used pre-recorded demos. I find these can be quite good in two situations.
The first is when you want to cover a lot of ground, because part of the exclamation point is to show how complete and robust the product is even at an early stage. It ends up being easier to move around and speed up low-value flows through a pre-recorded video. It also eliminates the risk that something goes wrong.
The second situation is when your product is incomplete and buggy. A bunch of things may not really work as designed yet, so it’s better to pre-record it and ensure that it goes more smoothly. It’s hard to get away with this when your company is more mature — at that point, you should really be doing a demo with the real product. But when you are pre-launch, I think this can be a reasonably good approach instead of trying to demo something that you know is pretty buggy.
Mistake #4: The Function Over Form Demo
I think that design is something that it integrated into a product, not a veneer that is slapped on afterwards. So, I often question the value of showing unpolished products with the caveat that “We haven’t given this any design love yet.”
Why would you show a demo at all if it isn’t well designed? The only reason to do that is if you are showing some sort of unique functionality that creates an exclamation point response independent of good design. Absent of that, what’s the point? It doesn’t do anything to show that you are capable of building something generically buildable.
If you are trying to show that you are close to launch, it’s better to show something that is well-designed but non-functional versus something that is functional but not well-designed.
Again, your decision here is based on whether you have a plan for the demo and what the priorities are for your product overall.
Hopefully these are helpful thoughts. I’d be curious if others have examples of common pitfalls for founders giving demos to investors — please add your thoughts below.