500 Startups First Accelerator Demo Days Draw Big Crowd, Some Caution

YongoPal's Darien Brown discusses his company at a 500 Startups Accelerator Demo Day

At the risk of sounding like a naysayer, I admit coming away from Thursday’s 500 Startups Demo Day feeling as if a similar scene unfolded a decade ago against the backdrop of a Pets.com sock and a Webvan delivery van.

The crowd was eager, the startups engaging and the investors from firms such as Sequoia Capital and Highland Capital Partners hung on every word from a string of young entrepreneurs.

Sure, investors such as Steve Bennet, a board member of the Sand Hill Angels, find real value in such gatherings. “These are my favorite kinds of events,” he said. “You get to (see) trends by coming here.”

But the hype was evident, too, as founder after founder sought seed rounds of hundreds of thousands of dollars and investors readily lined up for meetings and lunches to learn more.

Thursday’s event was the second consecutive Demo Day for the inaugural class of companies at 500 Startups’ new Accelerator incubator. It was a compelling lot of businesses. Most founders were young, energetic and full of ideas.

Startup Visual.ly, for instance, is helping publishers turn large data sets into online visualizations and graphics to show to readers. Wednesdays hopes to connect people over lunch, helping individuals and employers set up luncheon groups and build new relationships. (It also wants to raise between $150,000 to $200,000 in seed funding in the next 90 days or so.)

Meanwhile, the goal of Waleed Abdulla, founder of Ninua, is to let people share news. His news reader on Facebook has 1.7 million active users and operates similar to Twitter, where people follow one another or publishers. And Ninua just launched a news-reader app for Android phones. Its team of four engineers and one designer is seeking a seed round of $500,000 to $750,000, says Abdulla.

Certainly, Abdulla (and colleagues such as YongoPal’s Darien Brown, pictured) had the right audience to pitch to. Among the listeners was Eric Manlunas, managing director of Frontera Group, which runs a micro-cap fund.

Approximately half the companies pitching are worth getting to know better, said an upbeat Manlunas, who came up from Los Angeles for the event. Attending demo sessions is perhaps the most efficient way of seeing what’s taking place in Silicon Valley, he added.

And yet, despite the exchange of ideas, there was a note of worry. The big question is how many companies at a Demo Day-styled event attend simply because they can instead or because of extraordinary customer response to their business plans.

Said Bennet: There is some froth and “I’m kind of being cautious.”