DEMO 2009: A Smaller Showcase for Startups

Fewer early-stage companies are pitching to venture capitalists this year, but new Web services and high-tech gadgets are on display

By Arik Hesseldahl

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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."