Today, famed Silicon Valley startup incubator Y Combinator held its 15th ever Demo Day at the Computer History Museum in Mountain View, California. It was the largest YC Demo Day ever, with 75 companies comprised of some 180 founders presenting the apps they had spent the past several months perfecting.
Amid all this hustle and bustle, there was one notable absence, something that had definitely been a big part of Demo Days past: The funding slide.
Typically in these kind of on-stage pitches to rooms of investors, there is a portion of the slide presentation that shows off how much money the startup is looking to raise. Often it also reveals how much of that funding goal has already been met. A startup founder will close out his or her pitch by saying something like this:
“We’re raising a $1.2 million seed round, and 80 percent of that has already been committed — so if you want to be part of our disruptive vision, make sure to find us after this presentation. We’re the ones in the pink shirts.”
But at this YC Demo Day, none of the startups’ pitches mentioned funding status at all. Not a single funding slide to be found.
According to Y Combinator co-founder Paul Graham, that was not a coincidence. The funding slide was deliberately banned from YC’s Summer 2012 startup pitch decks, he told me in a brief interview on the sidelines of Demo Day. The reason, he said, was to bring Demo Day back to basics.
“The point of Demo Day has always been to kick off the funding cycle for startups,” Graham said. But in recent years, the Y Combinator partners started to notice that startups were focusing more and more on having a good amount of money raised by Demo Day — to be able to say they’d raised X amount of money already. Y Combinator startup founders are by nature a competitive bunch, so the funding metric became a point of obsession over time.
Money is not exactly a bad thing for startups, but the problem was, the increased focus on raising money during the Y Combinator incubator period distracted from the real purpose of the YC program: For tech entrepreneurs to spend all their time and energy on building the best apps possible.
It all started to become in many ways “a race to the bottom,” Graham said. So for this batch of companies, the YC founders ruled out the funding slide altogether.
The result has been that the Summer 2012 startups have raised a bit less money by the time Demo Day rolled around — which means that today is really the big kick-off for funding for a good number of YC startups.
As a reporter, it’s a bit of a bummer — I always like to get the nitty-gritty metrics on just how much seed funding a startup has raised. But it’s also nice for the overall vibe of the Demo Day event. Back in March during YC’s Winter 2012 Demo Day, I heard many investors say that the presentations were mostly for show, since lots of the startups had already closed their seed rounds by the time they stepped onstage. Talk about a buzzkill for those of us just encountering them for the first time.
Today was more of a genuine coming out party for the latest YC startups to start talks with investors, which added more electricity to the air. It will be interesting to see if other startup accelerators and incubators follow suit and ban the funding slide.
Now, you can also check out TechCrunch’s Top Ten Picks From YC Demo Day. You can also read our full coverage of the four batches that presented today:
Feature image from Zazzle
Y Combinator is a venture fund which focuses on seed investments to startup companies. It offers financing as well as business consulting along with other opportunities to 2-4 person companies looking to take an idea to a product. Y Combinator looks for companies with “good” ideas over companies with experience and a business model. The company made its first investments in Summer 2005. Y Combinator selects companies to finance and consult with twice a year. They are located in...