Sabrina Dent: Freelance web designer, developer and internet marketer living in Cork, Ireland with one dog and a husband in no particular order.
TechCrunch 50 Demo Pit vs My Bank Account
A couple of weeks ago, I mentioned on Twitter that I was gearing up for a last minute, 72-hour run at the TechCrunch 50 application. It wasn’t for a client – Katherine and I have been working on a web app project for a little while now. There was never any intention to run it in stealth mode, but TC50 requires that you stay under wraps, so we’ve been waiting to find out if we made the cut.
As it turns out, we didn’t, which wasn’t entirely unexpected – we’re taking an existing model and applying it in a cool new way but we’re not re-inventing fire or anything. However, we did get an invitation to the Demo Pit. Not every one of the 1,000+ applicants makes the demo pool – there are only 100 exhibitors in addition to the 50 on-stage TC50 finalists – so we’re pretty happy about that.
We are also completely undecided about going.
Here’s the deal – we’re at the point now where we need to raise seed capital of €20 – 25K minimum in order to:
- Move Project X off of gaffer tape and bailing wire and onto a formal framework
- Develop the distributable modules that mean sales
- Pay for serious hardware when we open for public beta
I’ll be very straight and say: we do not have the $3,000 exhibition fee. We also do not have the €2,500/$3,500 it will cost to get both of us there, hole us up in San Francisco, and rent the kit we’d need on the ground there.
In fact, neither of us has enough money to pay our ESB bills right now, so really – we’re Brokey McBrokeyPants here. Trying to find this money would mean… I don’t even know what. A home equity loan, a bank robbery, or something else fairly serious like that.
On the other hand, I am 100% passionate about this project. More than 50 companies have come through my door in the last two years, and while I’ve been keen on any number of them, not one has made me say “I want a piece of that.” This one did, and if DemoPit is what the project needs, then that’s what we’ll do.
Somehow.
So here’s what I want to know:
- Would you do this?
- If you’ve done DemoPit in previous years, was it worth it?
- Did you raise funds as a direct result?
- What did you get out of it other than cash?
We need to decide fairly quickly because there are a lot of logistics involved in getting two tubby ladies and a fully functioning web app to San Francisco in a mere six weeks.
So advise me please, interpipes. Thank you.
28 Jul 2009
| In: Ireland | Tags:advice, start-ups, TC50, TechCrunch50
Sabrina
I’ve no idea what your app is or how you intend to offer it.
However if going into the “demo pit” gets you a lot of PR then it might be a cost effective way of getting sales …
Promoting any product or service ethically (ie. without spamming etc.,) takes time and money.
Something like this *might* give you an edge
I honestly don’t know if it will or not, as we’re not in the line of business that would get involved with such things as TC50 …
Michele
28.07.2009, 1:51 pmI can’t help, but I would like to wish you luck with the project :)
28.07.2009, 1:52 pmCan’t advise on Demo Pit but “Pay for serious hardware when we open for public beta” worries me a bit. Does the app. really need serious, dedicated, up-front hardware? give some thought to expandable virtualised systems e.g. Amazon EC2, Slicehost etc.
A lot of people overestimate their beta launch day hardware needs and dig a deep debt hole for the hardware. And then in 1 year find they have to replace the hardware anyway. And serious kit takes serious management, setup, configuring etc.
Best of luck with the app., wish I was flush and could invest.
28.07.2009, 1:59 pmThanks guys!
:Paul: By “serious hardware” we don’t mean “Massive amounts of kit” – we mean proper a staging area that doesn’t start with C:\ and hosting that isn’t, you know, a shared server at RandomHost.com. Nobody is talking about a dedicated rack room at Rackspace :)
Sabrina,
While some people might rave about TC50 and Demopit I have my doubts about the real value of these type of events. All it really looks like is a huge marketing and group-hug event and while some really cool stuff has been shown at these events none of the ones that were successful (that is “made actual money” instead of just raising VC dollars) would not have made it without them.
Look at what you want to achieve. If you’re looking for customers I think that your money could be better spent elsewhere. On the other hand if you’re looking for VC or private investment you might just find it…
Would I go and demo an app at TC50 or any of the similar events? No I would not. Certainly not if I had to borrow money to do so.
On the other hand if there is anything at all I can do to help you with your venture just let me know!
28.07.2009, 2:27 pmEvert that’s it exactly – we’re looking for VC, or at least seed funding. If we were only looking to make floor sales, even with my crappy maths skills I can figure out that the cost per sale would be bordering on stupid.
So it’s one of those situations where you’re borrowing against the chance to raise money. On the other hand, I’m not sure where else we’ll find 100+ VCs in one room, all there specifically to peer at start-ups.
Sabrina, another thing is that a lot of US based investors that I have spoken to recently are reluctant to invest on this side of the pond. I would have a chat with David Smith in EI’s SV office first.
28.07.2009, 2:55 pmHey Sabrina,
You feel passionate about the product, not the opportunity to make money. Ergo, you and a VC will not be a fit. I would strongly advise to not even go in that direction.
If you need 25 – 30 K seed capital, find a business angel. The business angel network (www.businessangels.ie) is a much more likely place to get that sort of money.
Seedcorn competition is also a possibility (www.seedcorn.ie), but you need to put a lot of time into making up a business plan that is geared towards (guess what) filthy lucre and the traditional approach to making money that the “balance sheet boys” will understand and appreciate. I wonder if you would be up for the all bullsh*t required?
Would I do this? – No, I’d spend the time and money doing the real math on what it will cost to get to public beta, when first revenues will come in and where I could get the mortgage money for the first 2 years of building up.
Will buy you a pint if you up in this direction (except when I’m on my holliers till August 18th – whoopee) and give you any help.
Congrats on being shortlisted – can’t wait to hear all about the product.
28.07.2009, 2:59 pmSpeaking with my TC40 hat on I would definitely go for it. it was invaluable to us last year when we were in the Demo Pit as alumni, in fact we done more business in “The Pit” than we did from the stage the year before.
28.07.2009, 5:19 pmForget about it from a PR point of view as the fight for coverage will be intense, I would use it to further strengthen your partnership program.
If you are going to raise money I would say its an incredible long shot, if you are going to do business I would say its a must attend.
congrats by the way
Well done Sabrina, getting invited is great. I’m sorry the invitation comes with a signup form for exhibiting at a cost of a couple of 1000.
We (Locle) made a conscious decision not to pay for participating in these kind of things, based on no more than gut feeling. Reason is that for every TC event, there is a Red Herring or whatever else they might be called.
I see other people’s points about what you may get out of this or events like it but don’t see that it will help you in your case. There are also a lot of free events, ‘invite-only’ they call them but they are suprisingly easy to get access to and give you access to most financiers in Europe.
I’d be happy to help putting you in touch with who we’ve talked to over the past year to see if it’s of interest to them.
Good luck!
28.07.2009, 11:03 pmHi Sabrina,
28.07.2009, 11:05 pmFirstly congrats on being selected.
I’m not at all qualified to advise but just wondering if you’ll need the 25-30K in any case to move the project to the next stage?
Is “all” you’re looking at for the TC50 gig is the travel, accomodation and exhibition fee? Could you get prepared for the demo with a smaller outlay and postpone funding for the next stage (public beta, etc.) until after the visit stateside – maybe depending on the contacts and feedback you get there? Just an idea!
Good luck with it — Aedan
Well done on getting shortlisted, i hope it goes further.
29.07.2009, 12:53 amWoweee, congrats on getting invited to “The Pit”. I sincerely wish I had the cashola to reach in to my pocket and invest on what I know is a great product.
My gut would be that these things are a fantastic opportunity and as Pat said above, the opportunities to do business and make partners over there is fantastic. Would really take this from a project that was cooked up in yours and Katherines kitchens to something way bigger.
Alas – it might be time to go out and do a dance to the money Gods. (Just make sure the pesky kids peering over your garden wall aren’t around when you do so!)
Well done again :)
29.07.2009, 11:14 amCongrats on getting shortlisted, I know there is a huge amount of applicants for TechCrunch 50 so not easy to stand out from the crowd.
We’ve been through similar steps with Artworkbank over the last year (in terms of € amount raised to get a working product out) and my advice would be that the money would be much better spent on development at this stage.
Try and get on an EPP (i’d recommend Create in IADT but there’s lots of others) and use the time on the EPP to develop the App – hopefully with EI cord support or similar.
In ‘most’ cases a more developed app means a better deal from your point-of-view, rather than the investors, plus the time to develop the business plan and strategy is invaluable.
Just my .02
29.07.2009, 11:23 amBest of luck
Congratulations Sabrina, wonderful news!
I was going to mentioned the Angel network and Seedcorn but Sarah’s got there before me! You might also look at First Step (www.first-step.ie) if you have already gone to the trouble of developing the business plan for the rest of them – fire it out everywhere you can.
Also – if you have a relationship with your local CEB they might be able to help. You were clear in your post about not reinventing the wheel with your app but if there is nobody doing it in your area, then there is a chance they could at least help you with 50% of the capital costs. A bank will be more likely provide matching & bridging funding if you are being supported by a CEB. There are 4 CEB’s in Cork, I hope your local one hasn’t run out of cash… Just remember to apply before you spend – retrospective funding is a mare.
Best of luck! Keep us posted :)
29.07.2009, 11:28 amEvert’s idea is a good one. Do some research into what percentage of businesses at these events actually get funding and you might get closer to your answer.
Congrats on the Demo Pit.
29.07.2009, 12:35 pmWell I can’t give you any advice on whether or not to go to SF or how to get some money. I however want to say, that if I was running a public web app (which I don’t) investing in proper hardware would be a good thing to do. At least in theory because I must admit that I’m mostly rather negligent when I comes down to data backup. (I know, I know,…)
29.07.2009, 2:20 pmBut well, I’m just thinking about what happened to ma.gnolia.com or Journalspace not too long ago…
Sorry I can’t be of any help, but congratulations and can’t wait to see what you’re building in there :)
Glad to see you’re getting sound advice from people above, even if it is all contradictory – that’s the way of it I guess, at the end of the day you’ll have to weigh it all up and go with your gut.
From the comments tt does sound a bit like TC50 isn’t quite what you’re actually looking for right now, but that it might deliver something out of left field nonetheless.
Coffee soon I hope. Best of luck in the meantime.
01.08.2009, 9:30 pmIt’s been a while since I’ve raised money, and maybe this is no longer available, but it sounds like a project that an EI feasibilty grand would be ideal for, assuming you’ve already spent some of your own cash on the project.
01.08.2009, 11:27 pmSabrina, if you need a technical hand with anything (or if John needs a hand!), please give me a ping, you know – as always – how to find me.
Ciara, I’ve been in Katherine’s kitchen, and it is awesome.
03.08.2009, 1:41 amHi Sabrina, we’ve also been selected so understand you :)
I believe to be a winner, be with & learn from winners.
So I’ve asked a few past TC50 attendees & winners, as well as some basic research by my team. Response was 50/50. But we’re going !
I cant recommend if you should invest to go as I dont know your product/app. But ask those who have been-there-done-that. Bottomline:
- $$ You need angel funding,but make VC contacts there for future if you’re planning a series A downthetrack. Its a marriage so you must get to know each other.
We’ve put together a top 10 list of those we’d love to “marry”. The world’s Gods of Web 2.0 will be there.
- Media, dont count on much due to the comp, but you could actively leverage being selected as world’s top 150 startups
- Biz partnerships & networking with the world’s best is key. (Even more hiring the best).
- Wifi sucked (very embarrassing for TC50 I think), so prepare offline verison if go.
- The other thing that sux is TC50 doesnt give clear guidelines/rules re. what we can & cannot do re promotion leading up to 14.9. Ex. FB, Twitter, etc.
As for us, we’re planning to launch there, and will be raising a Series A soon. Hope to win the People’s Choice !:) TC50 is another step in building meebee into a $Billion company. What are your goals ?
Always happy to help fellow webtrepreneurs.
03.08.2009, 10:18 amCheers, JD
Hi Sabrina:
Congratulations! We’re one of the demopit companies as well…and we are going. There’s a mix of opinions in this thread and they are probably all correct in their own ways. We believe in opening ourselves up for scrutiny, feedback, exposure and opportunity. Great things happen when you embrace the unknown, but you have to actually be there.
End of the day, the opportunity will be what you make of it. Most companies underestimate the importance of networking and marketing while those are the two most important things early stage entrepreneurs can do. Hope to see you there, all the best!
Ashish
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