TechStars Seattle Demo Day: Have You Invested Yet?

11/1/12Follow @bromano

[Updates at 3:45 p.m. PT Nov. 1 and 10:33 a.m. PT Nov. 2, See below] There are a number of ways to measure the success of TechStars Seattle as its third class comes to a close with Demo Day this afternoon.

But let’s follow the money. I think we’ll see that this year’s class has received more angel and venture capital commitments going in to Demo Day than either of the previous two.

This reflects the increasing quality and renown of the program, which finances, nurtures, and mentors 10 startups selected from among hundreds of mostly local applicants. (An improving tech economy is also likely a factor.) Rather than waiting for the public fundraising pitches of Demo Day — the peak of hype and exposure for these startups — and the frenzied deal-making rush in the hours and days following, are smart investors putting more money into TechStars companies before the event?

The historical record: The Fall 2010 class (which included only nine companies instead of the usual 10), had landed about $500,000 in commitments, Kayla Roark, manager of TechStars Seattle, tells me after reviewing Demo Day pitches from the prior two years.

That’s 16.3 percent of the $3,075,000 the inaugural Seattle class ultimately raised.

In Fall 2011, pre-Demo Day funding commitments to the 10-company class were $3.35 million, exceeding the total in the prior year, but representing only 14.3 percent of the Fall 2011 total — a whopping $23.4 million. (Here’s the full TechStars stats page.)

I’ll be at the Showbox Sodo this afternoon to listen to the pitches, focusing in particular on the pre-Demo Day raises and talking to investors about the timing of their TechStars investments. My hunch is that some of them are feeling a growing sense of urgency to invest in TechStars companies ahead of Demo Day to get a good deal and avoid missing out.

[Updates at 3:45 p.m., Nov. 1 and again at 10:33 a.m. Nov. 2]:

It’s halftime at TechStars Seattle Demo Day. With five companies having presented, we’re definitely seeing a trend of strong pre-Demo Day investor interest.

Tred, Sandglaz, Glider, Leanplum and Bizible are collectively seeking $5.75 million. They already have commitments for $3.85 million, or about two thirds of what they’re seeking. Bizible is actually oversubscribed raising $1.5 million in a Series A led by Madrona. (Note:Bizible didn’t actually announce the round on stage, but they were introduced by Madrona managing director Len Jordan, who said he is really enthusiastic about Bizible CEO Aaron Bird and team, noting their deep technical expertise and “maniacal focus on customers” as they go about linking offline sales to online advertising. Bird said in his presentation: “We’re raising $1.5 million Series A, and we’re really excited to say that right now our round is oversubscribed, and we’re even more excited at the investors that are participating.” These include one of Bizible’s customers and “our lead investor is also a top tier venture firm, and they were our number one pick, and we’re just really excited to have them join the team to help us seize this opportunity.” So I’m connecting the fairly large and obvious dots here. Bizible, by the way, had the most capital committed of any of the companies in this year’s class.)

Halfway through this year’s class, they already have commitments in excess of those made to the full 2011 class.

Now having heard from all 10 companies, the total committed going in to Demo Day was $5.95 million, or more than 70% of the $8.4 million sought. Apptentive, which aims to improve the customer service experience of apps, had $1 million committed, well above the $600,000 they sought. [/Updates]

That’s not to say there won’t still be lots of money raised going forward; indeed that’s the point of Demo Day.

“It’s the showcase of what have we been doing for the last three months,” Roark says. “They have six minutes, sort of short and sweet. They’ll give the business and the investment opportunity. We’re going to have over 500 people there this year. Afterwards, it’s sort of this frenzy. We try to get as many investors, angels, VCs there as possible, to make matches with teams and investors that would be interested in investing in them.”

Why is TechStars able to draw such investor interest? … Next Page »

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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  • http://twitter.com/adamloving Adam Loving

    Oof. That isn’t the wording I should’ve used – though the sentiment I was trying to express is accurate – regarding how TechStars makes entrepreneurship easy. One correction: Lewis Lin is CEO of Linksy. I’m the CTO. Thanks Ben!