Angel Day

About halfway through each cycle we hold an event called Angel Day, at which each startup is paired with 2 angel investors, who will meet with them regularly in the weeks leading up to Demo Day. The setup is just like Demo Day, except the presentations are much briefer and more informal, and the audience consists of only the Valley's top angel investors. After the presentations, the angels list the startups they'd prefer to be paired with, and we try to do an optimal match.

In return for this early look at the startups, the angels agree to talk to their startups on the phone or in person once a week between then and Demo Day, and let the founders practice pitching them. The goal is to give the startups experience with the sorts of questions real investors ask, so by Demo Day they can either fix any problem that frightens investors, or at least pre-emptively address it in their presentations.

Since the angels are all real investors, if they do become convinced at some point, there shouldn't be much difference between would and will. And though there is no formal agreement about it, there's a convention that each startup's angels should be allowed to put some money into the company's next round if they want to. So far this informal deal has never been a problem. The angels we invite to Angel Day are the top ones, and no one ever objects to having them in a round.

The angels that the startups meet on Angel Day sometimes end up becoming advisors who spend a lot of time with them. But though Angel Day angels often help startups a lot, they're not meant to serve as the sort of "mentors" who advise the startups at other YC-like organizations. At YC, Harj, Jessica, and I do that. The angels we introduce startups to on Angel Day are just an added bonus, like the dinner speakers.

Angel Day grew out of something we did (and still do) with Paul Buchheit. A few years ago he started to come to YC for one afternoon each cycle and let all the startups try pitching him. Since startups found it useful, we expanded it a couple cycles ago to more meetings with more angels.

Demo Day

デモ・デーは大規模なものになった。最初、投資家は15人しかいなかったのに、今では3日間で400人以上の聴衆に4会場以上でプレゼンをするイベントとなった。聴衆の数が重要なのではなく、その400人が錚々たるメンバーなのだ。[2] これほど最高のベンチャー投資家が一堂に会する機会は、他にないんじゃないか。
Demo Day has become a big deal. From the first one, which had 15 investors, it has grown into an event that spreads over 4 presentations on 3 days to a total audience of about 400. The important thing is not the audience size, however, but who those 400 people are. [2] I doubt there's another occasion when such a large percentage of the top startup investors are all in one place.

(In fact, one of the biggest practical problems on Demo Day is to get them to stop talking with one another and sit down after the breaks, because this is like a reunion for them. We have to recruit the largest founders in each batch to act like Tokyo subway pushers and herd all the investors back to their seats.)

There's no specific thing startups are expected to be able to present on Demo Day. The startups we fund are all at different stages when the 3 months start, and some reset the clock by changing their idea. So the goal on Demo Day is simply for startups to be as convincing as they can for the stage they're at. There are investors ready to invest at all the different stages, if the startup seems promising enough.

After the presentations on Demo Day, we fold up all the chairs and for the next couple hours the room becomes a reception where founders and investors mingle and talk further. Investors don't literally write checks on Demo Day. The goal is not to convince investors on the spot, but just for startups to introduce themselves. Occasionally investors will say "I'm in" at Demo Day, but most of the convincing happens in subsequent meetings.

At the end of Demo Day what the startups usually have is a bunch of potential leads. Our default advice is to do a breadth first search, weighted by expected value. E.g. an angel who will decide quickly but will invest a small amount might have the same expected value as a VC who would invest a lot, but could take weeks to make up their minds. Whereas an angel who will only invest a small amount and will take weeks to make up his mind has a lower expected value and should be put on the back burner. Fortunately because we not only know the investors but can predict their reaction to each specific startup, we can tell the startups what the weight should be for each lead. There are a few investors for whom it should be zero, and we can tell startups about those too.

After Demo Day we keep in close touch with the startups as they negotiate the fundraising maze, and help them decipher the real messages in investors' sometimes deliberately ambiguous responses. Often we talk to the investors ourselves, both to find out what they're really thinking and when possible to help convince them to invest.

Because YC-funded startups are a known quantity to investors and get introduced to enough of them to create serious price competition, companies tend to get higher valuations than they might otherwise. One founder wrote:

I would bet any day that my cap was significantly higher (probably 2x) as a direct result of being part of YC.

Though probably more important than valuation is that startups get the investors they want.

We're in favor of startups raising some angel money before Demo Day if they can do it without taking too much time away from working on the company, because a startup is more convincing on Demo Day if they can say they've already raised money. For that reason we introduce the startups early to high quality angels who decide quickly. Angel Day is such an introduction en masse, but we also do some individually. Currently around 40% of the startups come into Demo Day having already raised some money. [3]

Other Events

サイクル中に、私たちは他にも何回かイベントをする。その一つはプロトタイプ・デーで、だいたい4週間目に行う。プロトタイプ・デーは、ベンチャーが互いにプレゼンする最初の日だ。プロトタイプ・デーの目的は、(a) 互いの仕事をいちおう知っておき、手伝えるなら手伝ってあげることと、(b)自分たちの仕事をどうプレゼンするか、起業家に考えさせることだ。だがこの時点では、起業家はプレゼンよりもソフトの作成に力を注ぐべきだから、私たちは「プレゼンにあまり時間を費やすな」と言い、プレッシャーにならないよう、そのサイクルのベンチャー以外はプレゼンを見せないようにする。
We have several other events during each cycle. The first, Prototype Day, happens about 4 weeks in. At Prototype Day all the startups present to one another for the first time. The goals are (a) to make sure everyone knows what everyone else is working on, in case they can help, and (b) to get the founders to start thinking about how to present what they're doing. At this stage, though, the founders should still be focusing more on building than pitching, so we suggest they not spend too much time on their presentations, and to keep the pressure low, no one except the current batch of startups gets to see them.

After Prototype Day we ask all the founders to vote on which of the other startups they'd want to invest in if they were investors. We do this not to reward those who win, but to get the founders thinking about how startups look from an investor's point of view.

A week before Demo Day we have another event called Rehearsal Day. The format is just like Prototype Day, except now the presentations are supposed to be the first drafts of the startups' actual Demo Day presentations. As at Rehearsal Day, the founders all vote on which seems the best investment.

Just before Demo Day we bring in 5 or 6 of the best fundraisers from among the alumni to talk candidly about their experiences and give advice to the startups about what they should do. There is a certain kind of brutal candor only peers can deliver, and if there's one topic where it's warranted, this is it.

Now that there are so many alumni, we can have entire conferences where the speakers and the audience are all YC alumni. This makes it possible to talk about controversial things without worrying they'll be repeated. These are not part of any specific cycle, but when one occurs during a cycle the startups in it are welcome to attend.

About halfway through each YC cycle we run an event where a bunch of Sequoia partners come to YC, and each startup gets half an hour to talk about their company with one of them. These are just conversations, not pitches. Essentially the Sequoia partners act as free consultants, telling each startup which of their plans seem likely to work and which are likely to run into problems. The reason Sequoia does this, obviously, is to get an early look at the startups, but the reason we do it is that the startups find the partners' advice very useful. Plus it's a chance for the founders to take the measure of a partner at a top VC fund, which up till this point is an experience most haven't had yet, and might otherwise cause VCs to seem frightening and mysterious when the founders started raising money.

(Since people often ask about this, I'll address it explicitly: it was not a condition of Sequoia's investment that they get an early look at the startups. We've been doing these sessions with them since long before we raised outside money, simply because they're useful to the startups.)

A new event we introduced this cycle and will definitely keep doing is Alumni Demo Day. The day before Demo Day, we do a full practice run for an audience of just alumni (many of whom, to be fair, are now angel investors). The goal is to iron the last bugs out of everyone's presentations in front of a friendly audience, instead of having that happen in front of the investors on the first session of Demo Day. Afterward the alumni all vote on which startups they'd most like to invest in, just as they used to after presentations in their own batch.