LOL, agreed.

Grow up.

I don’t think that’s been true for years. Nearly all exits now are M&A, and the sweet spot for acquiring companies is in the $20-100M range.

If you are building a web services business, and you really don’t need the money, by all means, bootstrap. But if you look at the companies that pitched at DEMOfall08, you’ll see that they have all raised seed money, and are raising more.

Take Telnic for example. This is a pure web services play, a TLD with a database and a fee-for-service business model. They’d already raised some VC money, and were raising a Series B in the $25-50M range. They showed very well at DEMO, and they go live this month. Don’t know if they raised any money, but they definitely got a lot of strategic exposure. ObDisc: I’m a beta user of the service.

>Too often companies nowadays don’t worry about actually making money, it’s about an exit

It is true that many entrepreneurs are too focused on the big payday, rather than creating value and booking revenue. David Hornik made the comment at Start last fall that “When you see guys leaving McKinsey to start companies, things have gotten out of hand.” One upside to the current economic disruption is that realism is returning to the early stage space.

–Ax

“LPs want that capital deployed … $18K to pitch your widget to the blognoscenti and mid-stage investors that can take you to profitability and exit is a bargain.”

Mark Cuban was right. Too often companies nowadays don’t worry about actually making money, it’s about an exit, and VCs are chasing valuations north of $1B. I think this may ultimately be a case of misplaced expectations. There will only be so many Googles and Myspaces per decade.

There are a few, and a very few, VCs who are lowering their sights somewhat, and I frankly applaud them for that. (See my posting here: http://is.gd/kbc3)

But the truth remains that most funds are still chasing substantial 20%+ IRRs, and can’t get there in small bites. LPs want that capital deployed, and they want it buying great teams with solid plans and real traction.

>Your logic and models are old and outdated

Both are being tested by the current economic disequilibrium, but neither is old nor outdated. Companies with real products shipping to real customers don’t get there by maxing out their credit cards. That’s why you raise a seed round, to ramp up production, sales, and marketing. And I say again; $18K to pitch your widget to the blognoscenti and mid-stage investors that can take you to profitability and exit is a bargain.

DEMO is a very well-produced program, with plenty of networking built in, and the absolute cream of thought leadership in attendance. You don’t want to “pay to play”? No one’s holding a gun to your head. Kick it old school if you want.

But seriously, if you’re ready to launch a game-changing innovation, why wouldn’t you want to pitch at DEMO? And why would you want to pitch at TC?

–Ax

Do a search for the TechCrunch coverage of Charles River Ventures and their new $250K startup offer. Your logic and models are old and outdated, and others are adapting – but not DEMO.

No, my logic is that most entrepreneurs are not ready to pitch at DEMO. That’s a true fact by any calculation. Companies that have real products they are ready to introduce to a potentially global market are not one-man-bands with $5K in savings. Early stage companies start with their own money, and the F&F round, then maybe some seed funding from angels, SBIR, convertible debt, etc. VCs rarely invest less than $5M in a Series A, so to reach that point, an entrepreneur has already raised hundreds of thousands or millions of dollars in risk capital. Whether or not allocating .18 FTEs on a launch at DEMO makes sound strategic sense is, of course, a subjective decision, and for some companies, it doesn’t pencil.

But if your widget is ready to ship to global markets, $18K for a very high profile launch to industry thought leaders and potential follow-on financing partners is a drop in the marketing budget.

–Ax

TechCrunch recently covered a Mint.com study that shows the average amount most people have in savings is $5K. By your logic most entrepreneurs in America would NOT be ready to have a successful startup – no matter what their idea or skills are. As for tech journalists covering the event, DEMO has years of a head start while TC has done two … we’ll see.

Personally, I think DEMO rocks, and that Chris Shipley has done a masterful job of building the brand. They put on a great event, which is why it is so successful.

I don’t agree that there’s anything unethical about their revenue model. No one is compelled to present at DEMO, and the fact that they clear the shelves at $18K+ per slice tells me that that the price is right. That’s about a fifth of an FTE. Companies that can’t afford that for the benefit of pitching at DEMO probably aren’t ready.

There’s also nothing wrong with comping presenters and selling the eyeballs they attract to sponsors. But I think there’s a different value proposition with that model.

Some companies are raising money, of course (some never stop), but I don’t see launching a product at DEMO as being a fundraising activity. Sure, there are some investors sniffing the deal flow, but the real upside to DEMO is the media attention.

TechCrunch just doesn’t have the same appeal to tech journalists, and every time Arrington (or a proxy) takes a shot at Shipley, he loses that much more whuffie in that community.

TC positions itself as a BIL to DEMO’s TED, but ultimately fails in that the hostility and incivility makes it appear as clueless as it is classless.

There are lots of deal flow events going on that never make the media radar, but where early stage companies do indeed find funding. They cost a lot less than either DEMO or TC, and they’re the real backbone of the venture ecosystem.

DEMO is a great event for generating buzz, reaching markets and peer-to-peer networking. I’m still trying to figure out what TC is good for.

–Ax