43North lets startups pitch to investors, virtually

Venture capitalists are still looking for compelling investment opportunities, and startups are eager to raise money to fuel their growth.

The tough part is getting investors and startups together during the Covid-19 pandemic, with concerns about travel and meetings.

43North took a different tack. This week, the organization hosted a virtual “demo day,” allowing 13 of its portfolio companies to make four-minute pitches to 250 investors from around the country. The hope is the brief presentations will ignite investors’ interest, generate follow-up meetings, and ultimately get the funds flowing.

“(Venture capitalists) are becoming more and more accustomed to participating in virtual demo days,” said Lauren Baynes, 43North’s vice president of portfolio management and selection. “In the past, they were kind of seen as something you’d just skip over, because you’d rather go see companies in person.”

43North isn’t holding its annual business plan competition this year, featuring millions of dollars in prize money awarded at Shea’s. But the organization continues to work with startups, including prize winners from previous years, in other ways.

The last time 43North hosted a “demo day” was five years ago, in New York City. “The reason we haven’t done one since then is just the logistics, planning and expense around hosting an event somewhere else is really prohibitive,” Baynes said.

43North had set out to do another demo day this year, in a city outside of Buffalo, where it would be easier to bring together venture capitalists. Then the pandemic hit. With so many other business meetings shifting online, 43North spotted an opportunity, knowing that venture capitalists weren’t just sitting idle.

“They have to get their deal flow somehow,” Baynes said. “They have to make investments, and they can’t travel. So it benefits us a little bit.”

So 43North decided to make its demo day virtual. 43North drew upon its own list of venture capital contacts and partnered with DLA Piper, a global law firm which specializes in venture capital and had its own network of investors.

Thirteen of 43North’s past prize winners signed up to make pitches. Depending on their stage of development, they are trying to raise anywhere from $500,000 to $15 million. No time was allocated for questions and answers during the Zoom webinar, to hold the session to an hour.

“We knew we’d get more (investors) if we kept it a really tight program,” Baynes said. When the program ended, the investors received additional information about the companies and how to contact them.

In the weeks leading up to the demo day, 43North staff, board members and Techstars representatives helped the startups prep their pitches.

“Investors, I think, are drawn to more of a story than just someone who’s just spewing out statistics,” Baynes said. “I think the more that we can encourage our founders to become storytellers, I think the better they’re able to capture investor attention.”

Attracting that attention can prove pivotal. At 43North’s 2015 demo day, ACV Auctions met Bessemer Venture Partners, an investment firm which went on to lead two fundraising rounds for ACV. ACV’s valuation has since reached $1.5 billion, becoming Buffalo’s first “unicorn.”

“These opportunities to meet investors can absolutely prove to be transformational for the startups,” Baynes said. Bessemer participated in this week’s 43North demo day, too.

Scott C. Wayman, president and CEO of Kangarootime, said he liked the virtual format for this stage of fundraising.

“The typical 100 coffee meetings needed to find a lead investor for a traditional venture round, might have actually been expedited by this format,” Wayman said. His company, a prize winner in 43North’s 2017 competition, makes a mobile app that serves child care centers.

Wayman said in spite of the Covid-19 pandemic, Kangarootime just had its best quarter from a growth perspective. “We are starting to really groove consistent sales performance that just needs fuel,” he said. “Raising a significant round right now would allow us to double the size of the business quarter over quarter through 2021.”