Today ten companies from ERA’s latest accelerator class made their debut at the IAC headquarters. It’s the first demo day I’ve attended since general solicitation was sortof unofficially legalized Monday, although not much was different. There was still the usual demo day razzle-dazzle complete with theme songs (and even sequin-clad dancers?).
You can’t really call these things demos — they’re pitches. Solicitations, even. To an audience that includes investors, yes, but also press, ERA alumni, PR people, community members, and other hangers-on. An audience that is, dare I say, general?
However, as I predicted, the pitches conspicuously left off a crucial piece. Up until this week, most demo day speeches end with something like “We’re raising $750,000 in seed funding and we already have a third of it committed from top-tier angel investors.”
But today the demos very carefully avoided that. “If you’re interested in changing the way the world books its wedding bands (or sells its used clothing, or buys its farm machinery or whatever), talk to us afterwards,” the founders declared. No fundraising, no dollar signs, no explicit asks.
At the end, one of the program’s managing directors was sure to clear up any confusion about why we were there. “None of the companies here are fundraising,” he declared. WINK WINK. “None of them. They are all profitable, cash flow positive, they don’t need any outside capital.” NUDGE NUDGE. “This is not a general solicitation.” Ohhhhh! We get it!
ERA has gained steam in the last year, as its network of alumni companies has grown, and particularly as TechStars NYC has been in a period of transition. David Tisch, the program’s managing director, left in 2012, and his replacement, Eugene Chung, was dismissed three weeks before the program’s conclusion this summer. Nicole Glaros, who ran TechStars in Boulder and co-ran the NYC class with Chung, has been overseeing the program’s transition.
Today’s ERA demo day was packed as usual. The class offered a mix of consumer-facing and B2B companies. Highlights include Gigzolo, a platform to help event planners and wedding planners book musicians. The startup uses videos and a unique pricing tool to be musician-friendly while saving bookers time. It is a professional booking agent’s nightmare (they’d prefer the market stay opaque), but an independent artist’s dream.
ClosetDash (the one with the back-up dancers), got positive reviews from the crowd. One investor in the audience raved that founder Jennifer Lee, a former trader at Barclays, was “scrappy” and “going to succeed at whatever she does.” Still, the used clothing market is packed with well-funded competitors (Threadflip, Poshmark) and it’d be hard to argue that any of them have really broken out. ClosetDash’s differentiator is that it collects the clothing and does the work of selling it for the users. This is the way “sell your stuff” marketplaces are going. We’ve already seen it work with higher-end electronics marketplaces, like Gazelle and Sold. It’s unclear if it’ll work in clothing, but ClosetDash boasts 60 percent gross margins on its sales. The company has sold 9000 articles of clothing, operating on a $5000 per month budget to date. Scrappy indeed.
Another secondhand marketplace company, Machinio stuck out as promising, in spite of the fact that the founders pitched themselves wearing costumes. Machinio is a site to buy and sell used industrial equipment like tractors and bulldozers. There are classified sites and highly specialized marketplaces, but in general it’s a fragmented market, and Machinio aggregates everything into one place. The company monetizes with paid search and commissions. I was skeptical that the buyers and sellers of industrial equipment are ready for the Web, considering the average age for farmers is 57, a number which has been rising since the 1930s. Not to mention, farming isn’t exactly a desk job, so its not the most Web-friendly industry. But the Machinio team assured me that it’s a positive that its users aren’t Web-savvy. Machinio uses lots of phone calls in its process, and employs outsourced labor to do things like list the items on behalf of users, which helps bridge the gap between its users’ Web skills and getting a transaction done.
I also liked Agolo. It’s a natural language processing engine. I’m not sold on the business model yet (recommendations for local restaurants, etc, has been a challenging business thus far for Foursquare and peers), but I like the product. When I Tweeted “What’s a good dive bar in Park Slope?” I instantly got three accurate recommendations. It was downright delightful.
None of these companies are raising money (WINK WINK), because they aren’t participating in general solicitation. It’ll be interesting to see how many startup actually take advantage of the new rules. As Paul Carr pointed out earlier this week, the ability to generally solicits benefits companies outside of tech hubs like NYC and Silicon Valley much more than it does companies with easy access to investors. That explains the eagerness of Cleveland-based FlashStart to hold its demo day on the exact day the general solicitation ban was lifted. Meanwhile, startups on the coasts will carry on as they have.
- Entrepreneurs Roundtable AcceleratorEntrepreneurs Roundtable Accelerator is a seed-stage investment fund / accelerator in NYC
Entrepreneurs Roundtable Accelerator (ERA) is an early-stage investment firm and accelerator based in New York City.
ERA funds 10 startups $40K along with follow-on funding twice a year and provides them with 4-months of free office space, free legal and other services and free “hands-on” help from a team of 3 General Partners, 10 Lead Mentors and 250+ Mentors.
ERA is born out of Entrepreneurs Roundtable, a global organization with a mission to help entrepreneurs succeed.