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Fewer early-stage companies are pitching to venture capitalists this year, but new Web services and high-tech gadgets are on display
Judging from the number of companies making their debut at this year's DEMO conference, all is not well in the state of techdom. About three dozen startups are taking the stage at this annual showcase for promising early-stage businesses, which gets under way March 2 in Palm Desert, Calif. Last year almost 80 companies used the conference to pitch for funding, partnerships, and exposure.
In its heyday, DEMO served as a coming out ball for breakthrough products from such companies as Palm (PALM), Salesforce.com (CRM), TiVo (TIVO), WebEx (CSCO), and E*Trade (ETFC). Launched by venture capitalist Stewart Alsop in 1991, DEMO has since 1996 been helmed by Chris Shipley, a former technology reporter and now a noted observer of the Silicon Valley scene and adviser to early-stage companies.
Yet as the financial crisis has spiraled and consumers and corporations have pared spending, many startups have put off plans to launch—or shuttered entirely. "The sense of urgency has really gone out of the market," Shipley says. "Some companies have decided that now is not the time to launch a new product and they've pushed back their launch schedules so they can take time to work on their products more in order to really get them right." Indeed, it's getting a lot harder to find venture capitalists willing to pony up the funding many companies need at their earliest stages.
Shipley defends DEMO's paid format
Still others, Shipley says, have opted instead to appear at the sibling event, DEMOfall, held in September. It can't help that the DEMO conferences, owned by closely held publisher IDG, also face increased competition from rival conference TechCrunch 50, begun by Michael Arrington, founder of the tech blog TechCrunch.com, and Jason Calacanis, founder of search engine Mahalo.com. Arrington and Calacanis have been critical of DEMO's structure; startup companies exhibiting at the event pony up an $18,500 fee for the privilege, which the pair have described as "payola." Arrington and Calacanis' TechCrunch 50 doesn't charge startups for the right to exhibit.
Shipley plays down TechCrunch's impact. "Yes there are companies that are being very conscious about the money they spend," she says. "But entrepreneurs have always been able to make the decision about what's a value and what's not."
Many of the companies that have made the trip to Palm Desert clearly had the economy on their minds in building their businesses. One is Home-Account.com, a Web-based service that helps homeowners evaluate their chances of qualifying for a mortgage or a refinancing loan. Unlike other mortgage sites, Home-Account.com has no affiliation with banks or brokers. It is designed to help consumers objectively evaluate their financial condition and fitness for a mortgage loan.
Self-help for mortgage seekers
Backed by an angel investor, the company's founders come from the Internet and the mortgage businesses, says CEO and co-founder Mark Goldstein, a veteran of such Web companies as LoyaltyLab and Bluelight.com. "We looked around and we wondered why there wasn't a Quicken for mortgages," Goldstein says, referring to the popular financial planning software package from Intuit (INTU). "There isn't. There is no Web site or self-service software that can help homeowners determine whether they should stay inside their existing mortgage."
Goldstein says Home-Account.com uses homeowners' existing financial data to do two things: Point them to potential loan offers for which they can realistically qualify and help them determine what they can do to whip their credit picture into shape so as to qualify for the more attractive advertised deals. A basic service will be free and a richer-featured component will cost $10 a month.
The company intends to support itself on subscription fees and doesn't make any money from lenders or mortgage brokers. "We want to be the Consumer Reports of mortgages," Goldstein says.
Pitching a combination 'Touchbook'
Other companies launching at DEMO have products aimed at helping consumers find deals on smaller ticket items. Gazaro.com targets those who peruse weekend newspaper sales circulars from such retailers as Best Buy (BBY) but never seem to find what they want on sale. Users sign in, tell the site what they want and where they live, and the tool will track pricing and sales information and indicate when a nearby retailer has it on sale, and then print their own customized sales flyer.
DEMO will also feature its share of high-tech gadgetry. Consider the Touchbook, a combination notebook and tablet computer that weighs two pounds and boasts long battery life. The device's display lifts off the body to become a touch-sensitive tablet computer about the size of a large paperback The company behind it, Always Innovating, was started by Gregoire Gentile, whose prior companies include Zonbu, a maker of environmentally conscious PCs, and Twingo, a network security startup he sold in 2004 to Cisco Systems (CSCO).
Avaak has developed a new kind of Web camera it calls the Vue, which can be placed anywhere around the home or office to broadcast live to the Web, with practically no need for setup and configuration. Born out of a military research project—the Defense Advanced Research Products Agency (DARPA) and the Office of Naval Research are investors—the Vue uses a proprietary wireless technology with a range of about 300 feet, requiring a wireless hub connected to a home router. It shows a live scene the user can look in on, but doesn't capture sound. A starter kit with two cameras and a hub is expected to hit the market this summer for about $300.
Meanwhile DEMO is in transition. Shipley and IDG announced on Feb. 18 that Shipley will end her involvement with the DEMO conferences after DEMOfall this September. Taking over as executive producer in 2010 will be Matt Marshall, CEO of VentureBeat.com, a blog site devoted to venture capital-backed technology startups. The change will give Shipley more time to focus on her own company, the Guidewire Group, a consulting firm devoted to advising early-stage companies. "With DEMO I get brief and not very deep encounters with these companies," Shipley said. "With Guidewire I get to go deeper and help them with their strategy and their plans to make money. But as for DEMO, it's been a great run."