Toward the end of your journey through an accelerator program you'll present at a demo day.
First off, don't let the name fool you. Nobody actually demos anything at these events; you'll just be giving a five minute pitch about your company explaining how great you are and how investors better get on board now before your valuation gets too high. Nobody does live demos because the pace of presentations needs to keep to a standard rhythm and that's hard if someone is counting on sketchy wifi.
Broadly, a pitch at a demo day covers the problem a startup is solving, the product one is solving it with, how it will achieve distribution, how it will make money, the early traction the company has, and the team involved. The pitches actually have become so predictable that some people have even taken to making bingo cards with key phrases that you hear at demo days all too often.
You might rightly wonder why there is so much attention paid to these events when they can get remarkably cookie cutter. First, you have to understand that the demo day is a much for the accelerator as it is for the cohort of startups coming out of it. Accelerators need to put on a show to attract quality applicants and media. Demo day is also a convenient was to get potential investors to come out and look at the accelerator portfolio. Since a lot of startups coming out of accelerators will be looking to fundraise, this works for the all parties involved.
While your pitch won't show a demo of your product, not having a version of your product online at this point will cause you to miss an opportunity. Any demo day with its salt will have some degree of press coverage and the tech press is usually pretty good about actually linking to the companies being discussed whereas old-school media never does and is thus less than useful. If your company only has a landing page collecting emails you'll be worse off than if you have a product people can actually use and give feedback on.
While evaluating an accelerator for your startup, you can also look at demo days as an indication of the pedigree that is associated with the accelerator. You can tell Y-combinator is the top of the accelerator world judging by the sheer amount of media attention that is paid and how there are enough deals that actually take place at the event that a protocol had to be established.
Another way to judge an accelerator is based on its demo day attendees. While it's tempting to just look at the total number of bodies in the room, you really want to know the number of cheque-writing investors present.
Startup communities tend to have a large number of cheerleaders who come out to support the community at demo days, but you need movers and shakers. Cheque-writers are the best judge of a demo day because whatever vertical your startup is in, the general audience at a demo day probably won't be your exact target audience so you really aren't looking for customers so much as you are investors.
After the main pitches there tends to be a lot of mingling amoung the crowd where everyone can talk to the teams who were pitching. This is the time where it pays to be extroverted as you need to meet as many cheque-writers as possible.
The difficulty of this is that a lot of attendees will want to speak to the presenters and there is an interesting game you have to play by being nice to everyone but quickly finding out if they're a person you will want to follow-up with so you can give them more details or move onto someone else.
The hardest thing is to avoid are the "service providers," like SR&ED consultants and lawyers, who while you're trying to pitch to investors will be trying to pitch to you. Though, in fairness, a lot of times these demo days are sponsored by service providers so they can get access to the teams.
Still, maximize your time with people who can move the needle of your business so as not to miss the opportunity. Incidentally, as an alumni of an accelerator, I feel it is my job to be a "wing-founder" at these events and deflect service providers from the presenters so they can go talk more with angel and seed investors.
I've noticed that founders in accelerators tend to stress demo days a lot more than they need to. Really, the hardest part around demo day are the things around it such as making sure you have a functional product up and running, following up on leads for potential investors, and leveraging any press the cohort gets off the event into something more specific for your startup.
It may be a media circus, but it's important for the community and sometimes these events are bigger than you or your specific startup.