The founder of a company in which I am an angel investor recently told me a story about choosing between Demo and Techcrunch for his company’s launch. Both conferences invited his company to launch at their event, but because Techcrunch was free, while Demo charges $18.5K, he choose Techcrunch. When he informed Demo of his decision, they offered to waive their fee, which I find interesting. Given the significant influence of both conferences, this chain of events got me wondering how well the two groups of start-ups – both launching at roughly the same time – fare after the conferences are over.
Techcrunch and Demo are difficult to compare in a true apple to apple fashion. Both events are full of highly qualified investors without a doubt. Demo has a broader range of companies present in terms of age and sector, however. Demo invites companies from capital intensive sectors like telecom equipment and hardware. Techcrunch, by comparison, is more tightly focused on young digital media and SaaS companies.
I compared 40 companies that launched at Techcrunch 2007 with the 56 young companies from Demo Fall 2007. (Because Demo includes non-startups, I excluded any company founded before 2004 or that had already raised substantial amounts of capital before 2007). I checked to see if each company had successfully raised capital and how far along the company was today. (Yes, I am a dork and this is something I do for fun).
The results are interesting, though not in the way I expected. Demo companies have raised more money in larger chunks, driven by massive fundraising machines Fusion-io and Jasper Wireless that have raised a whopping $178M.
Techcrunch companies, however, experienced a higher hit rate. Six out of ten Techcrunch companies successfully raised venture capital in the future. By comparison, four out of ten Demo companies ultimately received venture backing, which seems like a significant difference to me.
The real difference, in turns out, is the performance of the companies for their investors. If a hypothetical investor invested in all 40 Techcrunch 2007 companies, your “faux-fund” would have been been 100% returned in just three years (with$255M invested versus $270M in proceeds from Mint and Powerset). In addition, there are some interesting companies left in the Techcrunch 2007 portfolio, including Clickable, Trip-it, Pubmatic and Kaltura. This portfolio is a winner.
By comparison, the early-stage Demo “faux-folio” has fared pretty poorly to date, returning about 25% of capital invested. To Demo’s credit, however, they have some apparent winners left in the “portfolio” as well, including LiveMocha and Bill.com, so just like most VC firms, its too early to tell.
|(in millions)||Demo Fall||Techcrunch40|
|% Raising VC||39%||60%|
|Total Amt Raised||$422||$255|
|Total Exit Proceeds||$107||$270|
|Exit $ Per Company||$1.9||$6.8|
There is one important disclaimer. I did this analysis while watching Mad Men and so I make no claim that it’s perfectly accurate. Some companies are stealthy about their fundraising. Some companies should probably have been excluded because they weren’t really start-ups. I believe, however, that the data is directionally accurate.