It is ridiculous startups have to pay to pitch

I just read Jason Calacanis’ post about angel investors who are charging to have startups pitch them.

That’s totally ridiculous.

I NEVER charge for pitches and NEVER charge to interview startups or people for my video show or to get on building43. I don’t even ask if you are a Rackspace customer. It’s totally ridiculous that such a system exists.

I’ve never heard of such a thing amongst the Silicon Valley angel networks or investors. Might explain why so many companies come here to start up.

Right on Jason for pointing a light on this practice.

Comments

  1. It is just as ridiculous college bound students have to pay application fees – after all, if they are accepted, the college gets a lot of money whether from the students pocket, the parents of the student, or scholarship.

    —-

    Anyway, sorry, my mind was on that when reading your response.

    It IS ridiculous and sounds more like a scam. Let me charge now for something, and then later I still reap the reward.

  2. Agree. There is a fine line when it comes to advice … and pitching is kind the first step to that in some (many?) cases.

    Still want to know where startups get the money to pay for such things in the first place (given all mine goes into just keeping the idea alive!).

  3. Perhaps VCs think their money is more important than a blogger's time and attention (which won't pay employees' salaries). I'd honestly rather raise a series A round than see a blog post with a video interview.
    Don't get excited. I'm just thinking out loud.

  4. Good VCs don't charge to hear a pitch. At least none of the ones I've ever dealt with did that. By the way, you won't raise an A round without adoption. Look at Foursquare. Why did they just raise a round? Because all sorts of bloggers were both talking them up and using them and pushing them to their readers.

  5. This happens with angel groups all the time. I also hate it. I don't even go to meetings of angel groups, because they like to hear themselves talk and invest far less than they b.s. I invest by myself in things I know, and arrange individual meetings with friends to get others involved if I want to.

  6. You are correct. Good VCs don't. However, maybe times are changing? I don't know.
    Yes, I agree about Foursquare (which I love). But what about all the companies that require funding to actually build a product? Hardware, green, enterprise software, etc. Bloggers can only help so much because adoption isn't a part of the plan.

  7. I don't cover companies that aren't doing technology for consumers all that much, and in this industry at this time if you want funding you better either win TC50, have a team of superstars, or have a team that is getting adoption at a quick pace. Or all of those together. Companies that don't have a PR plan don't seem to get far in life, though, whether that includes tech companies or hardware companies or car companies.

  8. Generally, you have to be careful about who is creating the forum. The real question will be: is anybody with quality money going to attend? It does no good to pay to have a bunch of money-seeking companies like your self looking with no one listening.

    However, there are some exceptions. In Houston, there is Rice Alliance and it has four meetings per year. We attended the BioTechnology conference in June for our Liquid Protein Separation Machine – 100 time faster, 30 times more sensitive and can see Peptides… Also can run samples over and over again to prove the very same results. Yes, we paid $75 per person, and I think it was worth it – entire day to meet BioTech VC's – we generated interest in two out of five VC's presenting speeches about the industry trends…. and there were over ten top flight firms there total.

    One is still in the hunt contingent upon them finishing their latest Biotech fund.

    I would recommend RICE ALLIANCE to all Texas Companies looking for technology funding… They also have a good conference for NanoTech – Rice has the Smalley Institute – remember the man – he discovered Carbon 60 – Buckey Balls…

    Regards,

    Bruce Badeau, CFO
    ProteoMicro
    281-236-8260
    bruce@fser.net

  9. It's too bad that folks like Jason (and Robert) have to invest their time trying to convince some people of the obvious.

    Let's face it, no warning will ward off would-be pay-for-pitch scammers; and on the demand-side of the curve, we all know that some folks need to learn by doing, despite all the warning flares the community sends up. There's a market for pay-for-pitch; and a sucker born every minute. Maybe a big, expensive lesson is exactly what they need to learn to stay away from fire or you'll get burned?

    - John Coonen

  10. “I NEVER charge for pitches and NEVER charge to interview startups or people for my video show or to get on building43. I don’t even ask if you are a Rackspace customer. It’s totally ridiculous that such a system exists.”

    Thank you for not charging Robert. I was about to send you a pitch when I saw this post. Charging lessens the ability to find the next best product or service. I believe greed is the culprit. Investors are trying to make the fact that they are investors a commodity. You're right, it's ridiculous. Thanks for sticking up for the little guy!

  11. “I NEVER charge for pitches and NEVER charge to interview startups or people for my video show or to get on building43. I don’t even ask if you are a Rackspace customer. It’s totally ridiculous that such a system exists.”

    Thank you for not charging Robert. I was just about to send you a pitch when I saw your post. Charging for pitches will only lessen the ability to find the next great product or service. I believe greed is the culprit. Investors want to make money off of the fact that they are investors. You're right, it's ridiculous. Thanks for sticking up for the little guy!!! You rock!!

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  14. You say “Bloggers can only help so much because adoption isn't a part of the plan”.

    Adoption is only part of the value. The key when you create a new project is to get quickly from 0 to 1000 active users so that you start having a feedback loop, start measuring and iterate.

    I think that this rule is true for every new product which tries to innovate. It is a key ingredient to survive inception.

    This is why blogger which have a large and active community are a key ingredient of the start up ecosystem.

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  16. Robert – As a corporate attorney, I agree in principle with Jason’s position that it is “inappropriate and predatory” for angel groups to charge entrepreneurs fees to pitch them; however, I think it is important to distinguish among the different angel groups and their respective practices. Indeed, if (i) the fees are reasonable/de minimis and are adequately disclosed and (ii) the angel group is providing a legitimate service to entrepreneurs, there may be compelling reasons to support such a fee-based service. That’s why I have strongly recommended in a recent blog post (see http://bit.ly/hAYeu) that Jason Calacanis and John Dilts (the founder and President of Maverick Angels, LLC and an attorney) meet face-to-face and have a live debate (in the great American tradition), which can be shown on the web to all interested parties via ustream. Many thanks, Scott

  17. We are all getting “overfeed” to death. It is akin to a bank charging you a monthly service fee to have a savings account.

  18. One of the worst offenders (because they are SOOOO expen$ive) is http://www.keiretsuforum.com. They charge a few thousand dollars to pitch their groups (you pay per location, however are required to pay for minimum 4 angel groups).

    What I never understood, was if you had thousands of dollars to pay them to be able to pitch, wouldn't they be concerned that you're spending money (on them) that you really should be using to build your business??

    I was really shocked when I heard of his a few years back & still am incredulous. All the angel groups do it.

  19. Hip-hip-very-hip-hooray for Jason's stance against pay-to-pitch. I've helped raise money for a bunch of start-ups, and helped secure some of the initial financing for some successful companies like Wired, CNET, and Ask Jeeves (now ask.com). NEVER, and I mean, NEVER have I considered or would I even consider a pay-to-pitch situation. They are unscrupulous and predatory, at best.

    It's like those cheezy rip-off “talent agencies” that prey on wannabes and charge them ridiculous prices for head-shots, coaching, etc., but never find them any work, because they aren't really talent agents, they just suck your $ and send you off when it's gone. Or then there's the “we'll help you patent your invention” TV commercials… again, all these greedy MF's do is overcharge you for doing not much, if you're lucky, some of them steal any of the ideas that are actually any good.

    Besides being a total rip-off, my personal issue with these pay-to-play scams is that they give false hope to people who are just trying to follow their dreams, and instead of being honest with the dreams that need some more work, they coddle them, encourage them, and then scam them.

    The “con” in con man is “confidence.” They gain your confidence first. Your expose will help prevent some of that false confidence, I hope.

    Here's the secret investor's don't want you to know: there is more money than good ideas. Even in these recessive times. If you build a better mouse(-trap) the investor world won't necessarily beat a path to your door, but they will listen to your pitch, for free. At least the real investors, with real money, looking for real entrepreneurs with real ideas for viable companies.

    I used to joke that the difference between Northern California and Southern California is than if you go into a starbucks in SoCal, everyone is working on and talking about their screenplay. In The Bay Area, it's their biz plan. So, just like there have long been sleazy Hollywood types who just want to prey on your dreams, there are now the tech equivalents ready to make money by misleading eager tech wannabes. And guess what, some of those wannabes just might have the next YouTube, Facebook, or Twitter.

    So, all you tech dreamers, dream on. But don't let anyone charge you for sharing those dreams with them… unless they are your therapist!

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  21. A good point coffeegroup. It is an experience that will bring a lesson and certainly not the most expensive one. Pitching crap loses everybody's time so maybe there should be some price to it.