Countdown begins as start-ups await make or break digital chance

New Zealand's latest suite of promising digital startup companies will pitch to a roomful of angel investors next Wednesday, 28 May at Te Papa.

The culmination of the Lightning Lab 2014 programme, Demo Day is the platform for the teams to pique the interest of the right individuals and attract growth investment.

While recent news of cloud computing company Greenbutton's sale to Microsoft is a boost to the early stage investment community the statistics still show a long road to success for startups. Lightning Lab teams are pitching three months of traction to start conversations which may lead to capital.

Lightning Lab founding investor Susan Iorns says Demo Day is as exciting for investors as for the teams, and gauging the risk versus the companies' maturity and growth prospects is never a clear cut decision.

"This year's Lightning Lab startups are at various stages," she says.

"The older the companies when they started in the Lightning Lab the more investable they are; those with a new idea will likely come to Demo Day with lower valuations.

"The question for investors is whether the rewards will be larger if more risk is taken by investing at an earlier stage? We need to pick the best teams with the best ideas and back them.

"There won't be enough investment for all these young companies to get the funds they need to get off the ground. The possibility of huge success or failure makes this a really exciting time for teams and investors."

Last year's Lightning Lab Demo Day was the largest gathering of angel investors at a pitch event in New Zealand. With more than 100 registered for the event next week, the second Lightning Lab Demo Day may be larger.

Lightning Lab programme director Dan Khan says the interest from investors in the 2014 class has been active and several of the teams have already had conversations about funding.

"It's the second year for Lightning Lab, so we don't have the curiosity factor in play," he says.

"What we do have is a stronger programme, a set of founding investors confident enough of the Lightning Lab process to back ten more startups with seed money this year, and we know that the individuals in the room on Demo Day will be there because they are looking to invest in a team."

The 2013 Lightning Lab Demo Day garnered $2.1 million for four of the nine companies who pitched, and Khan says he would like to see at least as many get investment this year.

"You cannot pick what will happen on the day. The best companies in Lightning Lab have already got investor interest and some have engaged lead investors to take them into Demo Day," Khan adds.

"But a bad day on Demo Day can make it hard to get enough people interested. These companies have been honing their pitches for weeks now and they have another week to go.

"By the time they stand up on the stage at Te Papa, I expect them to have practised it 100 times. But it's up to the room to pick it on the day."

The audience at Demo Day is comprised of mainly investment community, as well as Lightning Lab mentors, and a collections of invited guests from the startup community and family and friends of the teams pitching.

The seven minute presentations are the best shot the startups have at gaining the interest of investors, and sparking further discussion at the closed investor-only session following the pitch event.