An anecdote: I was demoing a game to someone on my iPhone. The game crashed so bad it rebooted the phone (bet you didn't know that was possible.) As the game froze but before it crashed out I immediately began talking to them and made eye contact to shift their focus back to me. Kept on talking and making eye contact so they didn't look at the phone and was able to pretend that it had fallen asleep mid-demo. Hit the home button after it rebooted, entered my passcode, and rebooted the game. Worked the second time and I don't think they noticed the crash.
Re: Ask HN: Best way to react when your tech demo fails?
#11-Always have a backup
-Keep on going