When creating atmosphere on stage, a demonstration can really encourage connection with the audience. Additionally, being able to explain what the product is and does while showing it in action is a great way to make a story visually interesting as well.
However, when it's aimed at venture capitalists to raise money, there's more to it. Before you start planning how your product will be demonstrated, you must first consider whether a demo is necessary. It is very possible that the answer is “no”. But there are other things that can be done instead.
The problem with demonstrations.
Demos are high-risk, low-reward activities when trying to convince someone to invest in your company, and there can be many reasons for this. The demos take a while to set up (are you connected to Wi-Fi? Is there a firewall?). For privacy reasons, data from real customers cannot be used, so demo data is needed. And some things just can't be proven easily. For example, on a virtual events platform, the magic doesn't really happen unless there are at least hundreds of people live on the platform.
There are many things that can go wrong during a demonstration: they usually last longer than expected and if you have to solve something on the fly, the presenter's nerves eat away at him... And all for what? Unless you're building a very specific type of product that can be demonstrated in a boardroom or over a Zoom call, it doesn't really help much. Investors are unlikely to be the product's target audience, and they are almost certainly not experts in the field to the point of knowing why your product is head and shoulders above the competition just by seeing a demo.
Firstly, it is key to think about why you are sitting in that room. One is there to raise funds. To convince someone to invest in the company, it is necessary to summarize what has been done to date, of course, but the vast majority of the speech should be about the future: what is going to be built, the markets to which will be reached, customers will be targeted, and all the wonderful ways the world will change and a ton of money will be made along the way.
What to do then
Simply put, investors barely care about the product as it is today, which is what a demo is showing. What matters most to them is where it is going and how profitable it will be.
You can't demonstrate the future, but you can paint a picture. Mockups, along with thoughts about why this is what customers will want and the markets this future version of the product will unlock for the company, are generally a much better use of time.
Already in the diligence or detailed pre-review process, an investor wants to understand more about the product. This is a good time to prepare a video demonstration showing how it should be used.
Realistically, though, a diligence call with one of your existing customers tells most investors a lot more about the product than a demo: it means they can dig deeper into what your product does well, how it works, and what you see the competitive landscape. Does it have a good price? Does it do what the client wants? What do you wish it could do or what could it do better?
Replace the demo with a screenshot or a photo or two. Accompany it with a narrative like: “The product does X, which, unlike our main competitor's product Y, meets our target customers' value proposition Z, which is why they love our product.” How much detail do you want to go into? In the vast majority of cases, that is all investors need and they can move on to the next part of the presentation.
