Why startups shouldn't have to pay to pitch angel investors

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[ disclaimer: written with boiling blood ]

When confronted with an abuse of power, an injustice or a scam I’ve developed a really effective technique: I blog, tweet and whine about it passionately for as long as possible. Basically, I do this until people get sick of me (some of you reading this have at various times told me this–I’m sorry!). I’ve learned over the years that this process is wildly effective in the long-term and has the added bonus of being great therapy. It’s a way for me to relieve the dissonance associated with the injustice, perceived or real, that I see.

So, I fight.

You see, where I grew up, you said what you felt and let the chips fall where they may. If you liked the Giants in a room full of Jet fans, well, tough s@#$t Jets fans (and Jet fans have a horrible existence anyway). My Irish mom and Greek dad are as opinionated as they come, and our dinner table was filled with healthy debate. So were the steps of the Brownstone where my brother and our crew sat all summer long in the 70’s and 80s, battling over the finer points of Star Wars, Yankees, X-Men and Howard Stern.

It probably didn’t help that I grew up in my dad’s bar. I watched him put an end to countless bar fights by clever debate techniques (i.e.
“is this really worth fighting over when we could be all be enjoying this amazing bottle of wine?”). Of course, when that didn’t work he would slam the offender’s heads into the mailbox on the corner of 89th and 3rd avenue. It’s probably still got the dents in it, I should go check. Ahh… the good old times.

I’m from the bottom, so I still feel like I’m from the bottom. In fact, my biggest fear in life is that at some point I’ll stop feeling like that. This is a long way of explaining to you guys where I’m coming from when you see me wound up like I am today.
Father forgive me for the rant I’m about to go on … you see, I’m simply programmed to fight.

My Latest War: Angels charging startups to pitch ================= Recently, I was made aware of a group of angel investors that were charging startups to pitch them.

Yes, you heard that correctly: the rich people (angels) are charging the poor people (startup entrepreneurs desperate for cash to fuel their dreams) to hear their pitch. No, I’m not kidding. This is actually happening — and it’s widespread.

Last week, a number of the TechCrunch50 companies informed me about firms calling them to present at their “Angel forums” — only to discover that they would face fees ranging from $1,000 to $6,000 for a
10-15 minute pitch slot. After additionally investigation by the Jason Nation (the top 10% of the maniacs who follow me on Twitter), I was sent details of one epic bastard that wanted $10-$25,000, plus a couple of percentage points of the value of the deal (you’ll find out who later in this email).

When I heard this, my blood started to boil immediately. So, I did what any maniacal, self-absorbed CEO from Brooklyn would do: I started a jihad against this dispicable form of payola and the people doing it.
It’s on people … it’s on like a Donkey Kong.

Why it’s wrong to charge startups to pitch =========== I’ve been in the startup scene since 1994 and in those 15 years I’ve met, interviewed — and in some cases, pitched — the most powerful investors in technology. None of them have ever charged me a dime for doing so.

It’s low-class, inappropriate and predatory for a rich person to ask an entrepreneur to PAY THEM for 15 minutes of their time. Seriously, what is the cost to the party hearing the pitch? If you answered “nothing” or “the cost of two cups of coffee” you win the prize!
Even if you rent a hotel room and put out breakfast for your fellow angel investors that’s like $20 a person. You mean to tell me that a room full of rich investors can’t afford to pay for their own God-damned $20 in bad coffee, stale pastry and stained ballroom rugs?
To be clear, I am making this a class war because it is one: cash-poor startups are bringing RICH angel investors an opportunity to become EVEN MORE RICH. As such, the rich folks should pick up the non-existent to minimal costs.

Why startups fall for “angel group” payola =========== Now, you ask: why would any self-respecting entrepreneur pay thousands of dollars to rich people just for the opportunity to pitch?
Well, the truth is that the more mature — or flat out better — startups would never pay to present. The best ideas by the best entrepreneurs get socialized instantly. As an new angel investor myself, one who has only done two investments of $25,000 and $50,000, I can tell you that I already get flooded with pitches. I can’t even imagine the volume of pitches real angel investors like Matt Coffin, Sandy Climan, Sky Dayton, Tony Hsieh and Ron Conway get inundated with.

This means that the only people who would pay to present are the entrepreneurs who are either “less good” or less connected. Now, I’m being diplomatic here in saying “less good,” in many cases, these aren’t just folks who lack a track record: they’re simply pursuing a bad idea.

In other words, if this was Hollywood, the folks who pay to present to investors are ugly, unpopular and lack talent. I know, that’s harsh but I’m afraid it is true. If you’re idea is good it will spread–even if you have no track record. If you’re only option is to pay to get in front of these folks you’ve probably got an idea that is weak or bad.
Not always, but probably. Or maybe you’re a little naive or desperate to get things going–I don’t blame you for this startups.

Now, before you go saying “Jason is connected and he has access to angels” remember that I hustled my way into this industry from nothing. I networked at free conferences and figured out a way to get on the radar of uber-angels like Ted Leonsis, Fred Wilson and Mark Cuban. They paid attention to me because I had good ideas. If my ideas had sucked, they would have ignored me. Period.

These pay-for-play scams remind me of the “modeling agencies” that charge people for representation, acting lessons and to have their headshots done. Trust me kids, Brad Pitt and Kate Moss did not pay to get representation–they didn’t have to. If you’re paying to get an agent, it’s because you’re being scammed.

What about ‘presenting fees’ acting as a ‘filter’?
The folks who run these scams are going to feed you some line of B.S.
like “we use these fees to filter out people who aren’t serious.”
They’ll say something like “if we didn’t charge these fees, we wouldn’t be able to filter through all the applications.”

Really? Well, the angels investors I know are really busy and they don’t charge fees. If Mark Cuban and Ted Leonsis — two really busy dudes running a dozen projects each — don’t charge why they hell do you? Oh yeah, right, you’re predatory DBs looking to double dip!


It’s your job as an angel investors to do the filtering and that should come out of YOUR RETURNS on your investments. If you have to charge it’s because either a) you’re a predatory DB or b) you suck at investing so much that your returns can’t pay for the time that you spend evaluating companies.

… or maybe c) you are actually a good person who has just never thought about how smarmy it is to charge a startup for your time?
I’m willing to suspend judgement for a moment and consider all of those options.

What do we want?
At this point I’m calling on all angel groups who are charging to do two things immediately:

1. disclose what fees they *were* charging, displayed prominently on the top-level of their website.
2. immediately state that they will never charge these fees — again, displayed prominently on the top level of their website.

If that is done, well, then this battle is over. We’ve accomplished our goal and everyone can get back to their day jobs.

However, if this is not done immediately, my group of startup CEOs and angel investors will begin targeting specific groups for elimination.
We will launch competing, fee-free events directly opposite your events. We will encourage angels investors, service providers and startups to boycott your events. You may even find our street teams outside your events handing out flyers.

This isn’t a joke and this is a threat: stop charging startup companies to present or we will do everything we can to put you out of business with a competing, free option.

Now, if you think this is too hardcore and you don’t like my style, well, I can understand that. If you would rather take this offline and try to work something out, well, that’s not available as an option.
There is not going to be any kind of negotiation and I’m not going to meet you for coffee.

Also, I don’t care what you think of me and I certainly don’t care if you email my investors (like one group has started doing) to tell them I’m out of control. The people who invest in me know exactly who they are investing in. In fact, one reason they back me is because I am a little out of control. Deal with it.

Angel Groups We’re Investigating
1. Keiretsu Forum ($1,000 to $8,000 to present according to sources) The first group that was brought to my attention is something called the Keiretsu Forum. They have chapters all over the world, it seems, and they’ve been doing their program for a long time. I’m told by people that they charge between $1,000 to $8,000 to present and that a lot of good folks are involved. This is not publicly available
information: they hide it! Now, if there are so many ‘good people’
involved, well, that’s great because good people will understand where startup companies are coming from when they demand that Keiretsu Forum drop their fees. If you have information about this group, please email it to me at jason at calacanis.com. We especially want to hear from folks who have been asked to pay or who have paid. Send us the documents please.

2. Maverick Angels ($500 to $1,000 to present).
This group is a splinter group from Keiretsu we’re told. They hide their fees in a “boot camp” to prepare you to pitch (what a joke). If you have details on this group, again, send it to me.

3. PrivateEquityForums.com (stunnning $14,500 to $25,000 plus 3-5% of your raise to present!) We’ve received information that Mike Segal of Joshua Capital Partners runs this forum that is looking for up to $25,000 and/or 3-10% of how much you raise! I’m in shock by this one… could this possibly be true? Do you know anyone who has attended this event or, worse, actually paid these fees? If so, I need you to email me immediately.

4. Tech Super Club ($595 to present).
This seems like a small event, but folks tell me they are charging
$595 to pitch to angels.

5. Angels Den UK (£850 + 5% of raised funds) Across the pond we have another reported payola scam that is looking for big upside in introducing you to angels. Disgusting! Send us the details of this one if you have them!

In Summary
To recap the email quickly:
a) There is no circumstance where an angel investing group should charge a startup to pitch
b) We’ve launched an investigation into these groups and need any information you have
c) If you would spread the word about this issue by discussing it with angel investors and startups we would appreciate it
d) We are demanding that angel groups waive all fees starting today
e) We are going to crush any group that doesn’t comply with our demands
f) There is no negotiation
g) Angel forums upset by this email: Jason doesn’t care what you think of him and could care less if you email his investors, his mother or the Principal of the Internet to complain about his bad behavior (plus these folks get emails all the time and are used to it).

JCAL out

209 thoughts on “Why startups shouldn't have to pay to pitch angel investors”

  1. This is the kind of socially and morally responsible thing everyone should do and rarely does.
    The world would be a better place with more people like Jason and his supporters.
    If I ever have the chance to shake your hand Jason it would be my pleasure.
    I have a startup and I have heard rumors of websites that charge fees.
    Fees for shopping to digital package+ or video to investors online.
    They also take a piece of the deal.

  2. Jason,

    Check out these folks:


    Step #3 – Pay $1000. To get past go…

    Did a pitch there long ago. The inner circle wanted to provide
    ‘consulting and prep’ services to get us ready. It was also
    presented as a networking fee, to get us in. Angels that we
    we already had on board were approached to join and pay member
    fees. What a scam… we wouldn’t pay it, and insisted on
    presenting without the B.S (our idea was good, and we knew it,
    and we were already working with some members of the group)

    Many of the people that showed up to listen to pitches
    were out of work and networking themselves. Post presentation
    we had to claw our way and win 2 individuals to invest
    (one-on-one pitches and relationship building). Overall,
    little to no value add… But today they count us as one of
    their wins… because some members invested (hah!)

  3. As an entrepreneur starting to look for angels investors I have come across these pay-to-pay “angel” groups and it wasn’t something I would ever consider. It’s simply wrong. Plus the kind of investors I want wouldn’t be a part of one anyway.

    Sign me up for the cause, one more foot soldier ready.

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  5. You should check out Austin’s “3 Day Startup”, word is they take 80% (yes EIGHTY) of your company to participate in their workshop! What investor would invest in a company where the founders are diluted to 20% almost from day one?!)

  6. This practice is very common on this side of the pond (UK), even by part-government run institutions aimed at ‘helping’ startups

  7. brilliant. and appalling. and reeks of desperation. just say no.

    at the end of the day entrepreneurs need to be clever about how they use their funds, grow their business, if they want funding straight off, have to wonder a bit about their model.

    glad to hear someone speak out about it.


  8. Fantastic post. Love that you named names.

    I do understand about the ‘filtering’ problem though. From the reverse perspective, maybe it’s not being big and wealthy that makes it hard for them to filter, but it’s that they are smaller and NOT the Mark Cubans of the world. They don’t have the resources to filter the way the big guys would (plenty of staff to help them research, more contacts, etc), so they do it a different way.

    I’m still very sad to see things go this way. I hope you’re successful in your campaign to eliminate them/their practices.

  9. If somone wants to argue it is a tactic to weed out folks that are not serious, I will say think about this,
    one can have a multimillion dollar idea and no cash. An Angel puts up a barrier to present. Well that Angel just
    shut himself out of an awesome concept. Perhaps that startup will go down the street to the next Angel that
    won’t charge.

  10. Predatory is right, JC. But it’s hard to feel sorry for these
    rubes that lay out 99% of their budget for a simple pitch that is most likely a crappy product times 10.

    Taking advantage of a man that has a dream is sick, for sure.
    But gee whiz, survival of the fittest should figure somewhere
    in your algorithm.


  11. You should see the thing they are doing locally in Chattanooga, TN. It’s “48hr Launch” recruit a team and make a startup in a weekend. It’s based on Start-up Weekend. They are only charging $40 but the way they went about recruiting or trying to, most of the entrepreneurs and then tried to tell us they had investors in their back pocket for “good ideas” seemed a little off base.

  12. That is disgusting and despicable behavior on behalf of these angels. As a entrepeneur looking to get some ideas off the ground this is truly disheartening to hear. I am seeing more and more postings about startups not going after VC / Angel investors because of this.

    This type of extortion on cash strapped startups is patently unfair, and the activity itself just stinks. I think I’ll just forego the capital, though it would be nice to have, and just keep things in stealth mode, pursuing a more organic growth pattern.

    Thanks for the heads up, Jason.

  13. Deplorable! A “Inventor Tax,” limits innovation because someone who has a good idea is immediately discouraged thinking they can’t afford to even get started! It goes against the concept of free market entrepreneurship.

    If those investors wanna complain, they should complain to the President of the Internet..oh wait! =D

  14. I’m with you on this Jason. Startups are giving Angels a golden opportunity they shouldn’t have to pay for the offer. In situations where the angels are investment management firms, their clients should be contacted and informed. Also where are the ethics that these supposed role models are meant to be instilling in new entrepreneurs. I have to say that although I havn’t personally come across this practice, I find this news quite disturbing.

  15. Having to pay to pitch anyone is ridiculous. Why not VCs/angels have to pay to pitch us?

    Bottom line is, if you pay to pitch an investor, you are are identifying yourself as a desperate, naive, uninformed person, and possibly greedy person (read on). You will be fleeced, some might say you deserve to be fleeced.

    These “pay to pitch” scams work on the same kind of people as those Nigerian email scams (or other “get rich quick” scams). The reason both of them exist is because there are enough twits out there that click or pay or whatever. And, so, the rest have to hear about it and get spammed by it.

  16. Hi Jason

    You highlight an unjust business practice which in this day and age of the power of the community, cannot go unnoticed nor unchallenged.

    Your anger and call to action is justified and inspiring. I lend you my full
    support- you will not be fighting this battle alone- rest assured!

    We see this practice on the increase for a few reasons:
    1) Rising unemployment is contributing to a growing number of startup Entrepreneurs (one advantage of our recession I guess) seeking seed funding
    2) Investors (VC and professional Angels) are moving away from seed stage (few VCs ever did seed anyway) for less risk-profile investments creating a shortage of seed funding (another result of our recession)

    Now, some clever CEOs of Angel Networks have identified an opportunity: lots more startups seeking seed funding and a diminishing base of seed funders for them.

    “Ah ha!- Eureka” they spot a business opportunity, a gap in the market and a large customer base. They decide let’s run a business which:
    1) Targets young, inexperienced StartUps (the same ones mentioned above)
    2) Charge them a service cost for introducing them to a “select” but hard to reach Angel seed funder network.

    They assume the following:
    1) These new Entrepreneurs are desperate (yes- that’s true)
    2) These new Entrepreneurs are dumb (no- but many are ill informed, =same thing in their mind)

    But they also assume…,
    3) No one will speak up or complain! (wrong, wrong, wrong)

    I have brought this up before to one of your Angel networks mentioned in this list. For some reason they assumed I was a VC (I’m not- I’m a Social
    Entrepreneur) and gave me the following explanation:

    a) We’re a business, not a charity, we need to make money (just like
    VCs do)
    b) We have costs, we need to cover these
    c) By charging startups, we can filter out the less serious, less
    committed ones
    d) By doing this, we can secure a wider interest from Angels
    e) How rich of you VC guys to criticize us! We hedge our position just
    as you do! We cover our downside costs (through pitching fees) and provide an upside incentive (equity + commission) to ensure our interests are aligned with the startups and ensure we work extra hard on their behalf! (no different to what you VC guys do in practice= minimize downside/maximize upside).

    OK let us address this point by point:
    a) Yes they’re a business and we are happy for them to make money (they
    can do so without charging startups for pitching though)
    b) Use your “sophisticated” network of High Net Worth Angels to cover
    your costs- they’ve got the money
    c) By charging your Angels you can filter out the serious Angels from
    the charlatans or wannabes (and gain more credibility for your service)
    d) By doing this you will secure a wider interest and support from the
    Startup community (you need this if your business is to succeed)
    e) The startup community is a close network- Founder CEOs are no longer
    prepared to tolerate this- change your ways and our network will support
    you- continue to cheat and we will expose you!

    In summary, these Angel Networks got it the wrong way round. They can cover their costs by passing this on to the people with the money (Angels) not the Entrepreneurs. Simple solution is to change who funds the pitching costs from startups to the Angels.


  17. There are a lot of online angel networks where you have to pay to get listed or get access to angels.
    So you have to pay even before you can pitch.

    Because I am from Australia, here some local examples that piss me off:

    Basic Listing AU$795
    Full Service Listing AU$1275
    Premium Service AU$2929
    Success Fee 3% of funds invested
    “Private Capital for Private Companies” Guide AU$50 With Registration
    AU$75 Without Registration

    1. Investor Referral Service fee of $199. Your proposal remains active for 90 days and paying the Referral Fee gives you access to the contact details of ALL the investors interested in your proposal during this period.
    2. Upfront fee of $249 and take advantage of our Premium Services

    A charge of $150 is incurred to register your details for consideration by this Angels Institute group


  18. I love it, competition. SO… By these companies presenting fees to start-ups, they are causing you to increase competition and offer opportunities you wouldn’t have normally offered? ie Your new free events. 🙂

  19. I read your rant, and I also spent time at the privateequityforums.com website, and the one thought that occurred to me was that even if Segal’s outfit didn’t charge a penny, I’m not really seeing any true evidence of passion in his pitch. But I’m sure the live jazz is good.

    Contrast that with the Fred Wilsons and Mark Cubans of the world who DO evidence passion; if your idea is good enough, then they will become passionate about you, which is worth a lot more than $20,000.

  20. Keiretsu Forum is probably the worst offender in this. If you are dealing with one of their regional chapters, you are likely to be stuck with a “package” deal. For example, the Seattle chapter charges 4 x 1500 to present because it owns Seattle, Bellevue, Boise and Portland chapters. You have very little choice even if those other chapters outside of Seattle is of little value to you. Even before the market crash, this $1500 per chapter presentation fee will not get you a fool house. You will most likely get about a dozen or so people show up, and half of those would be service providers.

  21. Best blog post I’ve come across in a very long time and I’m not
    even in this business!

    An “Angel Hall of Shame” website would be a good way to track all
    these “risk takers”.

  22. Jason

    Thanks for a great post. You really nailed it. I’m on the east coast
    and I see this pernicious practice taking root here too.

    I am in the trying to raise investment, and have paid $$ for an
    opportunity to pitch, and then been dropped from the finalists list.

    Investors Circle is one such group that perpetrates this scam. I will definitely
    support your efforts on curbing this practice.

    M R

  23. Thank you for this article! I’m considering approaching Angel
    Investors for a Small Magazine startup. I’m still researching
    them, and had I not found this, I might have found out the
    hard way.

  24. Hey Jason,

    As a bootstrapping entrepreneur who’s about to visit the valley for 2 weeks, which angels / angel networks would you recommend reaching?

    (I run MySites.com, we’ve raised money before, but we’re not a case for VCs.)

  25. Yes, It’s low-class, inappropriate and predatory for a rich person to ask an entrepreneur to PAY THEM for 15 minutes of their time. and I’m delighted that you are boiling mad and fighting to stop it. Anything that can be done to shame these arrogant, selfish excuses for human beings is a good idea. Maybe they just don’t get the ugliness of their behavior.

  26. Thanks for calling these people out. I totally agree with you. I think TC50 fuels the same methodology in that it let’s entrepreneurs pitch without the ridiculous fees that similar forums do.

    I’ve spoken with a few people from Keiretsu Forum (via networking and introductions from friends) — they definitely aren’t of the caliber of angel investors that you mentioned in your article. In fact, I don’t think that most of them are real investors. It just feels like a really fake group of ‘entrepreneurs’ that have ‘made it’ (certainly not the people that have backed the real winners, IPO’d companies, etc.).

    The real lesson here though is to network your way to real pitches and not pay your way into the laps of non-credible, unethical losers.

  27. If you want the Crème de la Crème of these angel groups, check out:


    They charge startups $7,500 to present. What’s worse, 80% of the people in the room are not active investors, and are just there for a free meal.

    The events are put on by Ben Doherty, a guy who makes the liquor store bum look like a great CEO.

    Jason, if you’re going to put one of these groups out of business, I suggest you start with The Fat Cat Club. From their obnoxious name, to the fact that Ben puts on several of these events per month, I think it’s one of the largest scams running today.

  28. Totally agree Jason, great post. I am however curious about how you feel about startups being forced to pay the legal bills for both themselves and the VCs/Angels as I understand this is a common practice.

  29. You should probably add FundingUniverse.com to that list. They have their $29-$99 regular fee to list your business plan, but if you want to pitch at a speed pitching event, it is $495. And after you sign up, they start pitching a $5K “mentoring course to “help” you get ready to pitch.

  30. Hi Jason,

    I stumbled upon this article completely by accident but found your
    aggressive stance on this issue to be wildly entertaining. I always
    enjoy seeing someone with conviction standing up for what they believe. Of course
    what they are doing is pernicious and in many ways self destructive.
    Keep up the fight. I will be back to read future posts.

  31. Hello Jason,

    I just caught wind of this post and the problem. I just got done with one working with those companies that probably would have paid to pitch (another story for another time, eh? 🙂 We were out there without many connections and no sensible advice, so it really helps for people like you to take a stand and help those of us who are severely lacking resources and what might be considered “good sense” in an altogether new market. So thank you.


  32. Entertaining writing Jason.

    I agree with just about everything you say with one exception. Angels are not just rich people and deserve to pay for everything. I know many who have become disillusioned with investment in pensions, stocks and shares and feel like they would like some more direct control over their investments. Some angels I know are even doing this because they are “too old” to work so effectively they are buying their way back into the work environment.

    I certainly agree with your comments that a great idea and invention will get noticed but there are still some that slip through the gaps because they lack the network or support.

    I think there is a gap here and that’s why these guys are able to charge to prepare for pitches and bootcamps. If the angels were easier to talk to then maybe the gap would close on them. I feel that Angels are a little elusive and reclusive.

    Keep up the good fight. Don’t make it a rich v poor debate, use your intellect and logic to win this one.


  33. Hi JCAL, this topic caught my attention! You can add the Fat Cat Club (who are a fairly large network and quite well known) to your list. They charge $2-5K to present – a bit steep but that is not the worst of it. They require you to sign over $25K of options, for 10 years, for any deal you do anywhere ever after presenting to them, not matter if they invest or not. Unbelievable huh?

  34. I respect your crusade and wish you good luck.
    However, looking at the list of “angels” it looks that they are mostly “forums”. Could it be that third parties are helping the offer meet the demand and they charge those who arewilling to pay?

  35. I don’t really see any problem with charging to hear a pitch.

    I’m a partner in a successful software company and our average
    deal size is around $87,000. On our website, we have a form that
    anyone can fill out in order to receive pricing information, general
    corporate information, marketing consulting, etc. Well over 70% of
    the inquiries that we receive are from morons. People that really
    have no business whatsoever, but have incorporated and basically
    work a terrible part time job for themselves. Regardless, there
    people have contacted us and I need to call or e-mail to follow up
    with their request. Are they serious prospects that we could potentially
    do business with? Not in the slightest. They’re just idiots who
    think that we might be able to help them despite their lack of
    money, customer base, etc. They are a complete waste of our time,
    and anything that we can do to ensure that they are filtered out of
    our contact system, the better. If we charges people even $50 to
    contact us (refundable upon purchase of our software or services)
    then we would dramatically cut down on our workload, lower our
    costs, and be able to pass that savings along to our customers.

    Introduce a barrier to entry or you’re going to be inundated
    with every idiot who hopes to strike it rich. If you can’t pony
    up a few bucks for my time, then you clearly aren’t serious enough
    about your business or you’ve managed your cash so poorly that
    you have saved me the time of discrediting your personally. A business
    that can’t shell out a measly grand to woo an investor isn’t a business
    that’s worth investing in.

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  37. Until just now, I was unaware of this horrible new trend.

    Good job on exposing these greedy *Angels*.

    Keep up the good work.

  38. Awesome ! My respect for you goes up manifold.
    Though another side of me thinks this is some
    kind of publicity stunt because it sounds too
    ridiculous to be true.

  39. As I understood it, the sequence for angel investment was

    1) Startup submits summary to investor
    2) Investor decides whether the startup is worth interviewing
    3) Investor interviews startup
    4) If all goes well, investor makes deal which makes a profit and easily compensates for the 15 minutes the interview took

    If what you’re saying is true, there’s no reason why they would ever invest in a company. They’re getting at least $2000 an hour if they can get enough interviews lined up. Actually investing would leave them with less capital to invest, so make it more difficult to keep this going, and there are very few startups which would be making that kind of money from the get go, so they’re making a better investment just doing the interview and turning them down.

    Absolutely insane, good for you for spreading the word and warning people about this

  40. Mike Segal does in fact charge that amount. Here’s the email:

    Dear Charles:

    Just a quick follow-up note about introducing your company to investors at our 2009 National Business Innovation & Venture Capital Forum being held on June 25th at the Yale Club New York. I expect nearly 200 Angels, VCs and private equity funds to be in attendance as was the case with our March 5th venue, representing over $25 billion in investable funds. As I don’t believe that we have heard back from your office, I do not know whether or not you saw my earlier correspondence – or if your company is all set as far as its funding requirements are concerned. I am sure you get a large number of e-mails and did not want to trouble you any further if you are not seeking capital.

    Accordingly, if you would not like to receive any further information on our upcoming conferences, please let me know by return e-mail and your e-mail address of charlie.crystle@missionresearch.com will be promptly deleted from our distribution list. In this regard, please provide us with any of your other e-mail addresses to ensure that you receive no further communications from our office.
    In the event that you would like to learn more about this prestigious “investor-only” venue, you are welcome to call me on my direct line at 347 346 6650 or send me an Executive Summary and I’ll get back to you as quickly as possible. More information about the event, which includes Reference Letters, Current Registrants, Presenter Qualifications and Industry Sector Preferences, can be found online at http://www.privateequityforums.com.

    As only a few of the 15 Presenter slots are still available, kindly try to reach me at your earliest convenience with respect to your interest in being featured on the conference program. When we have a chance to talk, I can review the visibility options and any costs involved. Please keep in mind that unlike many other venues, our events are not subsidized or heavily populated by vendors and service providers.

    Confirmed guests already include such leading funding sources as Amwins Group, Asset Development Corporation, Black Diamond Enterprises, Blackhawk Partners, Bycent Group, Calgary Enterprises, Chatsworth Securities, Hudson Venture Partners, Innovation Ventures, Keiretsu Forum, Lightship Partners, Longview Capital Partners, Matthew Robert Associates, Nazem & Co., Network of Business Angels & Investors, OmniCapital Group, Originate Ventures, Quorum Funding Group, River Capital Advisors, SPM LLC, Spencer Trask Ventures, Tri-State Private Investors Network, Vaux les Ventures, Xnergy Capital and Western Javelin Capital.
    I look forward to hearing from you and learning more about your company.

    Kindest regards,

    Mike Segal, President
    630 W. 246th St. Suite 728
    Riverdale , New York 10471

  41. Hmmm… I think you should listen if one of these groups want to grab a coffee… I’m not agreeing with them. I’m just saying that not listening does not work very well. Even if they are not respectful, you still can be.

    Having said that, I definitely think this is an extremely valid argument!

  42. I completely agree with your post –

    To launch mebeam.com , I had to shell out over
    25k to pitch it to a group called bsi.com.au

    My partner pressed for it, while I was totally
    against the idea – the nerve of these people.

    We ended up shelling it out, gave our 15 mins,
    and although it did lead to some initial funding,
    it was from another startup who by the time
    we got funded, had run into a bit of their own

  43. What you describe is indeed despicable. Without a fund behind me (at this point) I plan to charge $10 for a 15 minute 1:1, just to cover the cost of organizing the event.

    But I think it is a result of what I call in my blog sub-prime VC phising for sub-prime entrepreneurs.



  44. I should just clarify my earlier post; charging a small fee for pitching events (such as speedpitching or other hosted events) is not what is at issue here. Nominal fees (up to $100) MAY be appropriate for certain events to help cover costs. What is objectionable is the practice of putting 100% of the costs, as well as a gross profit margin on these costs, solely onto the Entrepreneurs.

  45. kudos to Jason for standing up for the little guy, in this
    economic climate you’d thinking angels would be BEGGING for
    great ideas

  46. From an entrepreneur, kudos and thank you for fighting for the better of the industry.

    Those angel investors are definitely scammers. Same kind of scam I get in my mail-box about paying $250 to file my meeting notes.

  47. Too sensitive. This is just an approach. Rich people can charge for their time just like you can. There is no ethical obligation to listen to anybody’s crackpot ideas, pro bono.

    That doesn’t make it a good idea. The approach is limited by perceptions, like your own, that this is a scam. Also it is a barrier to great ideas making their way to the light of day, which is probably a bad filter in place if your goal is to find innovation.

    Not interested in you passing judgement on how someone else values their time. Your point will be made clear enough when you and others refuse to give them money. I am certain they will go away if the market doesn’t support them.

  48. btw, I do agree with your two suggestions:

    “1. disclose what fees they *were* charging, displayed prominently on the top-level of their website.
    2. immediately state that they will never charge these fees — again, displayed prominently on the top level of their website.”

    based on good business practice not necessarily ethical obligation.

  49. Excellent article.

    Here are 2 more for your list:

    Yenni Capital, New York, Musa Yenni
    – Yenni masquerades as a ‘VC’ then requires 5K up front
    to act as a finder, 8K per month for consulting,
    then demands 5% of the company

    http://www.goldenseeds.com – requires money upfront

  50. Great article. Thanks for this information, it is quite valuable for those that don’t know how things work in the investing area. Cheers!

    PS:I agree with James. Try and change it to a darker color: from #999999 to #444444.

  51. Angels Den is a portal that introduces the two parties. We do not fund companies ourselves. This is a big distinction.
    We charge and have no qualms about it … we could not be MORE upfront about it ……just check out the website … http://www.angelsden.com

    For the £800 fee ;

    > We help you write your Business Plan,
    > Meet you face to face,
    > Run Drop in Days four times a month all over the country,
    > Run 2 hour Pitching schools training you on what Europe’s largest number of Angels (and >300 West Coast USA Angels) are looking for and what not to say,
    > Organise and host 3 (THREE) events a month ….

    Yadda Yadda ….. “Sooo WHAT?” you scream … Well, I’ll tell you ‘so what?

    We are passionate, REALLY passionate about finding funding for business owners.

    Across here … people need help, we do not have the history/legacy that the USA does and funding is itself VERY Old-School-Tie.
    AngelsDen is very highly disruptive and …. you’re really not going to like this bit …. We are the cheapest, by a LOT….. of all the Networks (with any angels) operating across here …. Up-Front fees of US$8000 are common, with 5% success fees and 3% stakes into the bargain….. and that IS disgusting ….

    Also, we found that when we charged nothing, people treated the service like it had ZERO value, which was no good for both sides.
    Our angels got pissed
    So now we charge and make money only … (not asking for sympathy, just painting the whole picture) ONLY ……… if we find the funding.
    We are not going to get rich, running 17 staff and charging £800 for a comprehensive service.

    Listen …in an ideal world no one would charge for Dating Sites either … people should just “network” and meet a soulmate … and just “ugly, unpopular and lacking talent” (your words)… would have to resort to such sites … see where I’m going here?

    But sadly, across here, you could network from dawn til dusk and not meet the quality or quantity of people needed to fund your start-up (or date) …. We know this from the bitter experience of having tried to raise funds ourselves …. thats why we set up AngelsDen.
    Maybe it is very different across there and if people do not want to pay our fees, [which is normally just added to the drawdown] and want to take the time out from running their businesses to find funding then that is a business decision for them.

    At our events over 80% of people pitching have more than one angel interested in talking further …. We are more successful than the rest of the ecosystem combined … but recognise (sorry, recognize) that not everyone wants such a service. It’s not everyones’ cup of tea …. And know what? … thats fine as well.

    Should people pay to meet individual Angels? No of course NOT.
    But don’t tar us with the same brush … we are as close to a commission only model as you can find and Yip, we want to make a profit, but only after we have provided a service.

  52. Overall, I’m sympathetic to your cause, because I think it’s A Bad Idea to charge people to pitch their ideas.


    > To recap the email quickly:
    > a) There is no circumstance where an angel investing group should charge a startup to pitch

    There are no circumstances under which a pissed off blogger should dictate how someone else runs their business.

    > b) We’ve launched an investigation into these groups and need any information you have

    You’ve “launched an investigation”?! WTF does that even mean?!

    > c) If you would spread the word about this issue by discussing it with angel investors and startups we would appreciate it

    Ok, this part makes perfect sense. Don’t like the say someone else does something? Tell everyone you know, and ask them to tell everyone they know. NOW you’re talking The American Way!

    > d) We are demanding that angel groups waive all fees starting today

    Bully for you. And my dog demands that you waive all future and past demands, starting immediately. Woop.

    > e) We are going to crush any group that doesn’t comply with our demands

    Betcha a dollar…?

    > f) There is no negotiation

    You are correct. There is no negotiation. Don’t like the fees? Don’t PAY the fees! Duh! Nobody holds a gun to your head and tell you that you HAVE to go begging to a particular group to risk their money on whatever your latest scheme is. If your idea is so brilliant, go tell it to someone who will listen for free and support it.

    > g) Angel forums upset by this email: Jason doesn’t care what you think of him and could care less if you email his investors, his mother or the Principal of the Internet to complain about his bad behavior (plus these folks get emails all the time and are used to it).

    You tell ’em, Jason! Way to keep the upper hand. 🙂

    Btw, I’ve launched an investigation into your exploits. My dog will submit additional demands at some future date.

  53. Pingback: broadstuff
  54. Jason,

    Nice rant, and I agree completely, but this is very old news.

    Check out http://www.thefunded.com for a detailed review of most if
    not all of these from the people they pitched.

    This is a site for entrepreneurs to rate all the VC’s they
    have presented to.

    I personally have attended several of these forums and always
    approach the organizers and ask them how they possibly can
    justify charging starving startups to pitch to mostly luddites….

    I usually just get a blank stare.

    Glad you posted this, maybe something will finally happen to stop
    this, but I doubt it. They’ll just start calling the fees something
    else, change their name and keep doing it.

    Oh well.


  55. I second Fundinguniverse as a bad idea. They tried to do a really hard sell once they said they liked my idea, but I only had 48 hours or something like that to give them the 5k to secure my spot. Or else, they’d have to pass. It was extremely low-life.

  56. Jason, Thanks for taking up this cause! I’m glad I saw Fred
    Wilson’s post on MyVenturePad about it.

    I have been considering an early-stage / angel investor event
    organized by FundingPost.com in DC on October 21st.

    To be fair, the $75 fee applies to both angels and
    entrepreneurs, but the $2000 pitch fee for the single 20
    minute presentation slot has vanished from the site seems
    to be because of you! (However, there is no prominent
    acknowledgment that this was reconsidered after you spoke up.)

  57. Jason – Not only have I been bombarded by Mike Segal trying to get me to pay $25K to attend his event (I think he once offered me a “special deal” of $10K, I actually went to one (he needed attendees so I got to go for free). It was definitely a nice event (for the attendess) – Harvard Club, lovely lunch and very nice cocktail reception aferwards – very good food, very good wine. There were indeed a lot of people connected to the investor community. But very few true VCs per se. Mostly it seemed to be actual private equity folks and a lot of people in that nebulous “investment banker” category who “put together” deals. Not that they weren’t nice or that the conversation wasn’t interesting – very good guest lectures and all. And I’m sure that the event was useful for most attendees – good occasion for the PE and bankers to network. But I’m not sure that the very-short presentation times were all that useful for the entrepreneurs. I thought that there were far too many presentations (20-25) and they all started to blend together.

    I contrast this to another NYC event – the Hatchery. Here pitching was free and only three firms were chosen to pitch. And there were pretty decent level judges – Kevin Ryan, Lew Gersh of Metamorphic Ventures. Totally focused on the entrepreneur with a huge number of VCs in the audience. Or the Silicon Valley OPEN event – much larger but completely free (actually not only free – there was a cash prize for the winner – which was me in this case). Great judges like Howard Hartenbaum of August Capital, great speakers like Tom Campbell – the candidate for CA governor and a room full of VCs. Anyway, everyone knows that events need to make money to continue every year. But they should make money from those that have money….not the vulnerable entrepreneurs who are desparate for money.

  58. I could not agree more…

    Keiretsu is notorious for ‘charging’ startups for a ‘chance’
    to pitch to them. Makes my blood boil too. Thanks for being
    the much-needed high-profile voice.


  59. First, if you are a self-funded company you know that a thousand dollars can buy you a lot of marketing. Giving it to some middle man who promises to give you exposure to investors is like giving it to a gypsy.

    Second, after we had attended some FREE seminars and talked to some VCs, we came to a firm conclusion: they are stubbornly mentally stuck in the wild 90s. There is a need for a new recession/post-recession mentality and a new structure for financing start-ups.

    Third, they keep saying that “small business drives the US economy” and employs more people than all the large companies combined. Richard Branson in one of his interviews insisted that only small business started by entrepreneurs can pull this country out of the recession. Well, entrepreneurs need financial help. So, probably SBA and SCORE could provide the venues and act as organizers of FREE events where entrepreneurs and angel investors could meet. Naturally, they would need to be guided by people like Jason.

  60. this is a BRILLIANT expose!
    what gall. next thing you know, tv networks will CHARGE us to pitch our tv shows to them. harumpf.
    KARMA anyone? in this climate where people are losing their jobs and deciding to be entrepreneurs, it’s awesome that you’re exposing the ones that have the NERVE to charge people. btw, you’d LOVE a great children’s book called “the pushcart wars”. If you have an extra pile of money, i’d be happy to make that into a film for you! oh. wait. are you going to charge me ‘cuz i just pithced you? thanks for the spirited article. thank you to scobleizer for turning me on to it. best. sue.

  61. Why should it always be the angels who band together
    and put on an event? Has anyone ever tried to get a
    group of entrepreneurs together to be the organizing
    entity? (Maybe even charge the angels to attend?)It
    might take a while to get traction, but even if it
    were entrepreneurs pitching to mostly other entrepreneurs
    it could be valuable. Call an entrepreneurs’ pitching
    and funding co-op.

  62. It’s true that angels should not charge the startups a fee to hear them. But you’re confusing angel groups with support teams who are not active investors themselves, but make money by connecting the companies with investors. Ideally, they should charge both sides — investors in advance and the companies if they get funded — but they also need to provide additional assistance besides just making connections.

    Also, don’t forget that not all of the world is perfectly connected and not all good ideas can get spread as you are used to. Where I live, a number of very interesting startups have a trouble finding seed stage investors because there are literally experienced angels and even venture funds, and one has to travel abroad to compete with local startups elsewhere.

  63. http://www.wpiventureforum.org/Contest/instructions.html

    The WPI Venture Forum Business Plan Contest is open to technology-based, pre-start, startup, and on-going businesses located in the Northeast. Students are eligible. The venture must involve the development of a new product, a new application, or process in an existing business or the start-up of a new technology-based business.

    Upon receipt of application and accompanying executive summary, applicants that meet the criteria compete through three rounds of judging – First Round, Semi Finals, and Final Competition. Those advancing beyond the first round are eligible for coaching and mentoring.

    Deadline, Application and Fee
    Applications and executive summaries are due by 5:00 P.M. Friday, October 9, 2009. The contest fee is $50.00 which should be submitted at the time of application. Mailing instructions are on the downloadable contest application. Application and Executive Summary may be emailed to ventureforum (at) wpi.edu. If emailing the application, please call 508-831-5075 about entry fee payment options.
    Collecting Fees to participate in BP competition as well , strange

  64. While I agree the practice of charing so much is abysmal, the author seems really clueless when it comes to just how difficult it is to get angel funding.

    The idea that good ideas will just be found is naive. As if, to use his own analogy, Bradd Pitt would have just been discovered by Hollywood — that he didn’t have to, I don’t know, pay for acting classes, move to Hollywood, find an agent, and so on. It doesn’t just happen.

    The truth is many good ideas can’t even get to the point of being discovered, because those who have them have full time jobs and very little time to be networking and rubbing shoulders with possible angels.

    Instead they are bootstrapping their business or trying to. The opportunity to go before possible investors can be life saving for the unconnected entrepreneur, which is why they are willing to pay for the opportunity.

    Yes, it might mean they have a bad idea. But it also might mean they have a great idea and just don’t have the connections, time, social skills, to find funding.

    Instead of rallying against any pay to pitch schemes, why not just be opposed to the ones that are obviously rip offs. Paying a few hundred dollars to show that the person is serious and to cut through the slush pile is reasonable. Thousands of dollars isn’t.


  65. @104 – I do agree with Henry D that it is very, very hard to raise money. It is not hard to get an audience or raise money if you have an idea that targets a reasonably large market cap and (most importantly) you have a team that has provided a 10X return for some VC in the past. However if you don’t have BOTH of these things then you fall out of the category that Jason is talking about.

    In those cases, very often you either attend events like the ones we’re talking about and/or retain a fundraising professional (which is another scam BTW).

    As I mentioned in post 95 I’ve been to Segal’s event which is clearly not worth it. But giving credit where credit is due, some of these organizers do attract a great audience. There ARE evnts that are worth it – I have paid in the past for a slot at the Bootstrapper’s Summit. The room was filled with legitimate NY, Boston and Pennsylvania VCs – and it was good networking for the entrepreneurs. I’m not certain if this event is the exception rather than the rule but some do work. I would very much recommend asking other entrepreneurs before paying…

  66. The Keiretsu forum is a bunch of sharks and weasels. Any investor who wants to charge an entrepreneur to pitch them isn’t a real investor.

  67. Jason,

    I think that your message is dead-on, but your penchant for self-promotion and “threat” that ‘if this is not done immediately…We will launch competing, fee-free events directly opposite your events’ reeks of naked opportunism.

    Namely, Jason sees a market with dollars, and figures that by kicking an easy piñata, he can market the JC-branded alternative as the white knight solution.

    That’s cool, and all is fair in good solution marketing (i.e., more power to pitching a free alternative to a fee-based one – ala TechCrunch v. DEMO), but I just wish you were less fudgey about your real intent, which is less altruistic than you present, something that I blogged about in:

    Meme Schemes, Attention Seekers and M&A Flies in the Ointment

    Check it out, if interested.


  68. I’m sorry. Did I miss something here or is this a bunch of committed capitalists whining about righting the wrongs of “rich people”

  69. Jason,

    The world is full of “wrongs” Case in point, the 95% of internet startups that burn through OPM at ridiculous rates and the VCs that jam even more absurd sums down the throats of the remaining few succesful firms causing many of them to run off the rails with over aggressive expansions.

    Willing buyers and willing sellers dude.

  70. North Angels – http://www.northangels.com/

    Make you apply, act aloof like a real investor.
    Then by 3rd contact slip in that you need to purchase a “360 Report”, a proprietary “Startup SAT” (their words).
    Cost? $1850. Just to get their stupid software analysis, before there’s any pitch at all.

    Total scam.

  71. I went to look up some of the groups that I had historically found slipping hefty fees into their literature and I’ve noticed that a few angel pitch groups that used to charge a year ago have now quietly removed the fees. The ecosystem that spawned this has collapsed over the last year.. A lot of the predatory investors have actually moved on…

  72. This is just wrong, I’m with you Jason Calacanis, if I ever
    come into information about any of this you’ll get it
    in a flash.
    Utterly inappropriate, bad and disrespectful this practice is.

    (I know of an old saying that there is a sucker born every
    minute, and that is probably where these groups got
    their “idea”, but it is still wrong.)

  73. Totally agree with your viewpoint, Jason. Completely ridiculous for anyone to pay an investor to hear your pitch – if it’s a good idea someone will buy it. Have to give credit though – there are some groups making a quick buck from some gullible folks!

  74. If I remember my Bible studies as a kid correctly, the devil was an angel gone bad. Seems like these folks have chosen the same route. Thanks, Jason, for calling out these predators.

  75. As a corporate attorney representing entrepreneurs, I generally agree in principle with your 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 you 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 – and keep up the great work. Scott

  76. As an Entrepreneur and Angel investor in the UK, maybe things
    are different over here, but firstly, Angels will NOT pay to
    attend events and if Entrepreneurs want the opportunity to
    pitch to genuine potential investors, how are they going to
    find them without someone who will act as an introducer or

    If we agree to that point, how is said matchmaker or introducer
    going to be able to afford to do this job properly without
    charging one side or the other? As I already said, the Angels
    will not pay, so it is down to the Entrepreneurs to pay, but
    they do have a choice, no one is forcing them to do anything or
    pay anything. It is their own commercial decision to join in
    or not.

    To suggest trying to bring down companies offering such services
    is very naive,is that really how you solve problems in the US?

    I hope it is not, I am pleased to say that in the UK, most
    people from both sides think it is ok to transact like this.

  77. Most introducers and matchmakers do work on a success fee which is usually taken in equity. Sometimes they will charge a small retainer but mostly not. They don’t get paid unless the company gets paid. Which is fair since they are doing work which is connecting entrepreneurs to angels and VCs which for whatever reason the entrepreneur had difficulty in doing themself. No different from what an agent does, really. The really big issue is when the actual funding entity charges the entrepreneur to pitch them. That makes no sense at all. I’ve been to the Segal event and I’m not defending him but at least he is not the funding entity – he is a matchmaker. The weird thing is with Keiretsu and Tri-State Angels where the funding comes from the group and they charge to be pitched. That is the practice I think that everyone is complaining about.

    I just received an invitation to a VC event up in Boston where the entrepreneur does have to pay to attend but so does everyone else. And the entrepreneur is charged the same or less as investors, service providers and others. That seems fair – it is a trade show and you pay to attend trade shows. The entrepreneur can be chosen to present as well at no extra charge but there is an selection process. Which also seems fair. No percentage of raise stuff, no exorbitant fees charged to entrepreneurs only. Seems so fair, I may attend!

  78. Wow that’s pretty greedy if rich angel investors are charging entrepreneurs big time cash just to pitch them. I guess as the saying goes “the rich get richer, and the poor get poorer”.

    I would certainly never pay to pitch an investor, and I would hope that the rest of the smart entrepreneurs would never pay as well. Let’s band together to kill this poor business practice.

  79. Jason,

    Thank you for taking up the cause. Agree that most angel forums are not well structured to really help the entrepreneurs.

    Some of these forums try to justify the fees by saying that they only want serious companies. Yet, they offer little to the company to assure only serious angels are involved.

    The problem however is that business ideas are a dime a dozen and these forums will be flooded with business plans if they don’t have a good way of filtering.

    To address this issue, I suggest the forums should not only waive the charge as you propose, but impose a nominal charge to the angels to listen to the pitch, and the fees should go to the company. That way only serious angels will be involved. Let the angels do the filtering by deciding which pitches they want to hear.

    Now, is that too cold-blooded to ask the investors to ante up?


  80. Hi Jason,

    Thanks so much for this article – I have been looking for almost two years for investors and have thankfully refused to pay to present…although it hasn’t been easy. I have been tempted, but simply couldn’t have afforded it anyway. I wish I knew the people with money – would make it so much easier. Anyway, I continue on – just networking within the community and trying everything I can to get my information out there.

  81. I quite agree not surprised that it’s the UK one thats
    asking for the most rip off%

    And some of the poor buggers they get on Dragons Den
    get ripped look at Levi Roots (Reggae Reggae souce)
    they took 40%

  82. This looks like the latest pitch of the many independent
    “fundraising advisors” who charge 5-7% of the raise
    (common here in NE). Its just a new way to entice
    entrepreneurs in a competitive industry (advising).

    By making it sound like they will have a better chance of
    raising dough, entrepreneurs pay up.

    Same scam, different tie and socks.

  83. As CEO of a company that has raised $2M from angel investors over the last two years, I agree that some of the examples given are shocking. Entrepreneurs should check out the reputations of organizations and events and make their decisions carefully.

    Despite examples of exploitation, condemning every instance of paying a reasonable participation fee for exposure to investors is really throwing the baby out with the bathwater. In the mid-Atlantic region where we operate, the established angel groups generally don’t charge for reviewing business plans or hearing presentations. However, the area is also served by several non-profit groups that run respected regional venture fairs and other periodic forums, with a track record for successfully connecting investors and companies. These groups do typically charge an application fee and a presentation fee (from $25 up to hundreds of dollars) for those companies making it through the selection process.

    We have to acknowledge that it costs money to organize and publicize these events, deliver coaching, rent hotel ballrooms, provide exhibit space to the companies, and provide catering that meets the attendees’ basic expectations. True, in an ideal world, investors might pay admission fees that cover all these costs. But in the real world of individual decisions, raising the price of admission will reduce investor attendance, and that’s not in a presenter’s interest. Also, even if you could identify and get private appointments with every investor that attends an event, paying the fee for the event is still more attractive than the travel costs and time to deliver separate pitches. At least in this region, non-profit organizations are providing a valuable service to both “sides” by sponsoring events that for years have drawn serious investors and fundable companies into the same room.

    I think the best way to help other entrepreneurs through this process is to share information about the quality of investor attendance and the results achieved at different events. My company presented at two regional events this year that we can recommend without hesitation. The Angel Venture Fair (AVF) in Philadephia, http://www.angelventurefair.com/, sponsored by the non-profit Private Investors Forum, provided significant education and training, including personal coaching by some very sharp paid consultants. The AVF pitch rooms and exhibit hall were filled with legitimate investors, and virtually no service providers. The coaching and practice improved our pitch and helped us get the funding we wanted. Another good event is the Grubstake Breakfast, http://www.businessalliance.org/grubstake.html, sponsored by northern Virginia’s George Mason University Business Alliance for many years. Like AVF, Grubstake provided a legitimate audience of interested investors and was certainly worth the fee involved.

  84. Here’s another one: Gulf Coast Venture Forum

    “The GCVF charges a cost recovery fee of $500 to each company that is selected to present to offset the meeting room costs.” I hear they see 20 pitches per event, – that equates to $10k per presentation event. At 12 of these events per year, they are taking in $120k from entreprenuers.

  85. Interesting discussion. I’m active with Sand Hill Angels and have also been a venture partner at a VC firm. We never have and can’t imagine we ever will charge an entrepreneur. All of our members are investors (not service providers), which makes a difference from other groups. I always have fun with this question when it comes up during panel discussions. Fun to watch others squirm. Addressed this issue last year in my blog and just wrote a follow-on post. I’m definitely not a twitter guy as I like to let the dust settle before chiming in. Here is the post – http://www.professorvc.com/2009/10/watch-out-for-red-whine.html

  86. Calcanis is ignoring the pure market dynamics here. There are companies that do have tremendous success pitching at these angel groups that charge fees, and that’s why these groups continue to thrive. I’ve founded six companies over 21 years in three cities including Silicon Valley and have had my fill of one-on-one angel pitches or meeting with small groups who charge little or no fees. While I always raised my rounds in the end the effort was so time consuming as to debilitate the company while our exec team drove and flew all over the place to solicit investors.

    In utter frustration I finally tried Keiretsu three years ago – the biggest skeptic they ever had walk in the door – and to my absolute amazement it worked extremely well. We raised a total of nearly $9M, first in a convertible note round, then a Series A on pari pasu terms with a leading VC fund, and later in a bridge round – all over a span of two years. I also joined Keiretsu as an investor member because I enjoyed the due diligence process, sitting on the screening committee, and finding good investment opportunities… and perhaps mostly because I enjoyed the tremendous association of so many seasoned, successful entrepreneurs who make up the majority of the investor membership. We complement each other’s skill sets and experiences, which ultimately leads to better due diligence, higher success rate and ROI, and a greater ability to assist the companies we invest in, which ultimately helps all parties.

    For the privilege of getting in front of 50-130 quality investors at a time it was worth the $1500 per chapter that Keiretsu charged me (although admittedly I shirked violently at the price before going through the process). Over the years I’ve had many broker/dealer types offer me their assistance for 10% plus a retainer fee. I’ve wasted countless months fund-raising from angels the “old fashioned” way. So I knew my alternatives and decided that it would be worth a few thousand bucks to find out if this method would actually work better.

    So here’s how the math worked out for me at Keiretsu: I raised $9M for an all-in cost including flights, lodging and presentation fees of less than $70K. Not even 1%. I know several other CEOs who claim to have achieved a 2% efficiency in rising capital through Keiretsu and similar groups. That’s stellar performance in my book and it demonstrates the value of these organizations that compete against “free” and low-cost venues. My investors are the ones who are most pleased with the capital efficiency and time efficiency of the path we took to raise our capital, because it allowed us to focus on growing the business instead of endless and tiresome fund-raising.

    Having used all the approaches commonly available for raising angel capital, had I to do it again for another startup (as am surely likely to) my first choice would be Keiretsu as well as some other smaller groups that demonstrated the same kind of incredible time and capital efficiency for us. And here’s the subtle but significant difference that I have observed between the groups that are effective and the groups that just take your money. When you pitch at keiretsu you get documented feedback from the “mind share” session that occurs between the members after you leave the room. You get a roster of names with contact info and an indication of whether they are interested in investing, helping out on the due diligence committee for your deal, or just have some resources for you (e.g. a sales lead). Every other group I’ve presented to over the years lets you grovel for business cards in the 10 seconds between when your pitch is over and they put their fork down. With a real prospect list you can efficiently identify who is interested in what, and be able to reliably reach them. What an incredible difference this makes in following through on actually collecting checks.

    Where I can find some common ground with Jason is with groups that charge to pitch and then show you the door but do nothing to actually connect potentially interested investors with the company, or the ones who charge a % of the monies raised. The latter are in some cases playing with fire, hypertechnically violated securities regulations as unlicensed broker/dealers. Definitely stay away from those!

    Lastly, Keiretsu stands far apart from the other groups Jason listed in that they have a strong philanthropic and community bent that goes beyond just investing in startups. Their Keiretsu Foundation has donated impressive sums to all sorts of needy causes all over the world (there are Keiretsu chapters in Europe and China as well). I admire the way they weave at least one philanthropic cause into every meeting. We in the tech world are prone to forgetting to give back, so it is just refreshing to have this monthly reminder that there are other things to devote our attention and money to than our startups or our investments.

  87. I was watching Diggnation the websites I saw were really cheap looking. If you were a real Angel Group, you have extra money, that’s why you’re doing this. I have 3 words to say about this: SCAM SCAM SCAM

  88. Jason – you’ve got balls. Well done.

    There should be a list of those who do charge and those
    who don’t to help other entrepreneurs avoid the worst

    P.S. I love the friendlies that the angel groups enlist to
    post here/do damage control for them. Spin, spin, spin.

  89. Just to correct a possible misimpression from Tim Keane’s post above, Angelsoft is the back-end application processing system used by about 80% of the legitimate angel groups in North America (including Tim’s), and is the official deal flow management software of the Angel Capital Association (US), the National Angel Capital Organization (CA) and the National Association of Seed and Venture Funds. The large majority of investment groups using the system don’t charge any application fees at all (nor does Angelsoft charge a fee to anyone for applying to any of those groups.)

    The free availability of the platform, however, resulted in quite a few companies using Angelsoft to apply to hundreds of angel groups simultaneously, even if they’re weren’t a remotely reasonable fit. Since the platform is currently processing over 3,500 applications each month, the angel groups (mostly run by volunteers) were completely overwhelmed. We therefore decided to offer companies the alternative option of posting their exec summaries directly into the Open Deals area of Angelsoft (which was originally designed as a place for angel groups to share deals among themselves). All 20,000 investors in all 500 groups and funds using Angelsoft have access to Open Deals, where they can look through potential opportunities and refer to the angel’s home own group for consideration any companies they find interesting.

    Angelsoft charges companies $250 for a 30 day posting in Open Deals, which fee goes to Angelsoft for operating the platform, not to any angel group as ‘pay to pitch’. Note that the Open Deals option is completely independent from the [typically no-cost] application process to any particular angel group. It is completely transparent; fully described and illustrated; and with published statistics. It’s also completely optional. Personal connections and referrals are always the best way to approach investors, but Angelsoft can often be the next best thing for companies seeking to cast a wider funding net.

    Over the next several months we’ll be introducing some powerful, optional, premium tools for companies that will help entrepreneurs navigate the whole funding process. We’re developing these in cooperation with some of the most successful serial entrepreneurs and early-stage investors in the country, and are looking for startups who might want to participate in our free beta program. For that, or for any questions or comments about Angelsoft, feel free to email me directly at david [at] angelsoft [dot] net.

  90. Dear Jason (one of my favorite characters in Greek mythology
    BTW. Count me in on your quest to quash these SOBs. I have
    never, ever, heard of ANYONE getting funding from these scams
    and I have had the pleasure of starting up 8 companies and
    helping another 20 get off the ground. I am working with three
    now, and you are right about if the idea is good, it will get
    traction naturally. I am going to send you a LinkedIn request
    and lets help the people trying to help America (and the world)
    get in front of the people with the cash.

    Excellent post and thanks for the rant!

  91. I typed in to google search, free list of private investors, also private investors, investors, angel investors, every thing I could think of that might take me to a list of private investore that I could pitch my plan to. I could only find those who charge you to hook up with an investor they say is intrested in my idea, even though they have only heard a small portion about it, suddenly I get emails off the hook that these private investors are intrested in my idea.
    I only need pay the company who allowed me to give a partial pitch, they only want a measly little $299.00 and after a month of these ” Investors” sending me emails that I can not reply to, now the price has droped to only $99.00, does this mean the investors are not as good as the first ones? Ha ha ha.This is quite a large scam operation with a lot of people doing it and the sad part, there must be a lot of people going for it because there are so many doing it still.
    I need an investor, private investor who may even want to partner. I do all the labor while you sit back and collect. I am offering a great opportunity for someone who has kept up on Californias medicinal marijuana industry. I have over 30 years experiance and it’s time for me to make some money off it legaly now. LOL
    Is there any free lists of investors who does not charge to reply to them, talk back and forth for free ???

  92. Check out Chris Hurley’s Revolutionary Angels as described in
    Mass High tech http://www.masshightech.com/stories/2009/11/30/weekly11-Three-alternate-routes-to-financing-a-startup.html.
    Start-ups pay $5,000 upfront to have one chance in a hundred of
    winning a $250,000 prize. This means the start-ups collectively
    fund the single winner among them and Revolutionary Angels is
    left with $250,000 of play money. Pretty good deal for
    Revolutionary Angels, though I would question the fiscal
    prudence of a start-up that plays that game.
    Oh, and the ‘winner’ also has to pony up 10% of equity to
    Revolutionary Angels. Revolutionary indeed!

  93. I totally agree. To pay to present is ridiculous.
    I have to say I appreciate you for standing up.
    I chased a dream of so$e sort in entertainment for over 20 years.
    Within the last 4 years I decided to chase worthy projects as well as chase quality sources of funding.
    This is when the real nightmare started.
    Now imagine being a dam unknown trying to get pass all of the catch 22’s.
    Imaging working all day and night.
    Major Motion Pictures-Film
    No I bust my ass to be direct to sources of funding BECAUSE of this piece of shit hedge fund guy that has a hedge fund, and is direct to over 150 others.
    He did nothing but play games with me, and my would be producers.
    He was very disrespectful.
    He would switch sides from investor to broker.
    He would always try to milk a deal to death via his music mogul mentality.
    The very minuet it looked like I would get paid he walked away from the deal.
    I can go on and on.
    I just changed the focus and became direct(No Brokers Chains at all)- to a few viable sources of private equity/mezzanine-debt financiers.
    However the criteria is rather rigorous and most independent producers can’t meet it. I would literally have to get a slate off films off the lot of a major studio.
    That more than likely will never happen.
    What kills me is the fact that anyone with a name in Hollywood/Connections etc always try to get to your contacts and exclude you out the deal.
    Again not complaining, but god dam I bust my ass to get some nearly impossible things accomplished only to get hit over the head by the well known producers. That is bullshit.
    I mentioned I can relate to you because you made mention of humble beginnings. Also the fact that you stand up for the little guy.
    I’m not rich I just had ideas and went for it. No money/lawyers etc however a few significant funding sources will take my call.
    Why on God’s green earth people with projects always try to get to your contacts and beat you out the deal.
    NDNC as well as fee agreements is almost a joke.
    If you don’t have a budget for litigation entertainment lawyers your shit out of luck.
    At the end of the day a lot of people really need to be exposed. Stop killing the little guys especially when they are indeed working hard at being resourceful by providing viable sources of funding.
    Yes I know life is fair but eventually the wrong person os going to get ripped off and it might cause a little more trouble for the hotshots than expected.
    I come in peace, but in all actuality for some of the scenarios/bullshit I went through people would be resting in peace if I was someone else.
    I encourage you to keep fighting the good fight. Perhaps one day we can go off line and I really tell you some of the experiences/people I dealt with and we collectively start exposing them.
    At the end of the day fair is fair. Right is right.

  94. In response to Daniel’s note about Golden Seeds and New York Angels, this is a case where you can easily lose sight of the forest for the trees. As the Chairman of New York Angels, and a frequent co-investor with Golden Seeds, I can give you the facts: these two groups are, on anyone’s scale, two of the top five or ten most effective and legitimate angel groups in the world. Between us, we have invested over $50 million (yes, that’s MILLION, where a typical individual angel investment is usually $25,000 or so), in to nearly 100 different startups, most of them tech-oriented.

    We’ve worked with startups from their first hires through their sale to companies like Kodak and CBS, and have co-invested with a dozen venture funds (including best of breed groups such as First Round Capital and RRE Ventures.) Not only don’t we make our money by charging entrepreneurs, each of US at New York Angels pays our not-for-profit group over $3,000 annually for the privilege of investing our own cash into startups.

    So why, you ask, do we charge anything at all to entrepreneurs? Because, unlike [the also great, legitimate] groups that restrict themselves to ONLY hearing from a very, very few pre-vetted entrepreneurs [cough, cOAFgh] we have a fully open door policy through which we invite anyone to come to us for funding if they think we’re a good match. But given the number of companies looking for funding, and our own limited bandwidth (remember, unlike VCs who get PAID lots of money by their limited partners for finding and investing in deals, we PAY out of our own pockets to do this!) we would simply be deluged by people looking for ‘free money’ if we didn’t institute some kind of gating mechanism. (To put things in perspective, over 3,500 deals are submitted each MONTH through the Angelsoft platform to angel groups.)

    We therefore began charging a $150 fee to people applying to us for funding. That is far from exorbitant, and nothing remotely close to the many thousands of dollars charged by some of the organizations that Jason [appropriately] has called on the carpet. But when someone comes to us asking for a million bucks to fund their vision, and doesn’t think it’s worth investing even the cost of a pair of tickets to a Broadway show, that’s a data point that lets us narrow down our fire hose to at least a garden hose of applications. Is it perfect? Of course not. But is it evil? We don’t believe so.

    But perhaps you’re right. Given the firestorm and attacks here and elsewhere on the subject (a good bit of which, in all fairness, is quite appropriate, and in which we actively support Jason, whom I’ve known for close to 20 years), we may just end up going the route of many other angel groups and VC funds: not charging any kind of fees so that we don’t get attacked…but then also closing down our current policy of open applications, and simply requiring that any incoming deals be referred to us directly by our members, or other people in our network. Would you prefer that we handled it that way?

    As Albert Einstein once remarked, “in science, there are no rewards or punishments…only consequences”

    (By the way, I’m happy to respond directly to you or anyone else who would like to discuss this issue in detail. You can email me at dsrose at newyorkangels daht com.)

  95. Wow.

    It never occurred to me that charging fees helps “filter out” all those terrible ideas
    that deluge angel investors. I guess that means having the ability to write a check
    automatically makes my idea better than another. Sounds perfectly sensible.

    Here’s another groundbreaking idea along the same lines.

    I’ll start charging my prospects for visiting our website and contacting the
    sales team with questions. That means we won’t have to deal with those
    “70% of requests from morons” (see above) who obviously have no intention
    of ever making a purchase.

    It’s astonishing how much rubbish gets generated to protect the status quo.

  96. Not angels, but another scheme that cashes in on desperate founders is Founder Institute:
    For their help they take 2.45% Equity + $80 Application Fee + $1,600 Course Fee.
    If you get investment pay another $4,500 (all in Singapore $)

    Quiet the opposite of Y Combinator…

  97. Erik, Y Combinator are traditional angels, offering (probably)
    higher value add than most angels and (definitely) lower
    valuations than you’re likely to get elsewhere. They aren’t
    even vaguely the same animal as Founder Institute, which is a
    training program which has low fees for presentations
    by waaaay more legitimate presenters than the usual executive
    training crap. If you compare what you get and the price it
    costs to going to a regular conference, Founder Institute wins
    in a blowout.

    Full disclosure: I’ve spoken at Founder Institute.

  98. I haven’t been at Founder Institute nor at Y Combinator.
    To me it sounds like the end result is the same:
    Getting coached to develop your project and present in front of investors.

    Only at YC you get cash for it, at FI you have to pay for it.
    YC takes more equity though.

  99. Because you pay something up front, with FI you’re guaranteed
    to get mentoring, not just if you’re one of the ‘lucky’ few who
    actually get funded by YC. And yes, the amount of equity which
    FI takes is far less than what YC does, although presumably
    YC does a whole lot more mentoring and guidance for companies
    they really do invest in. Both are completely reasonable
    entities which provide a legitimate service in exchange for pay,
    and regardless of whether the fees are too high (I’d say for
    people who are completely green either are no-brainers) they’re
    very different from the predatory angel practices which this
    post is about.

  100. A guy named Skip Sanzeri, I approached with a great idea, and I got skeeved out and I became worried that he wouldn’t honor our confidentiality agreement. I asked him to state for the record that we had an agreement, and he freaked out and cut ties. I’m now sure he was just sizing me up to see if I could pay some fee. I think he’s connected to US Angel Investors. Thanks everyone.

  101. I work hard at bridging the gap between film producers/projects, and viable funding. As you all know too well this is an uphill journey. I have ran across so many company’s that say that I am talking to film financiers. Really?
    That is all bullshit. If you do not sign the check you are a broker/finder/maybe producer.
    A lot of these jokers would want to charge upfront fee’s etc. I would do battle with them for I know better. Hell I don’t charge up front fee’s at all, and I should. The bullshit producers put you through is ridiculous. Producers don’t want to sign NDNC/Fee Agreements etc. What the hell is going on. I’m not looking to do this for my dam health.
    Producers immediately want to interrogate you by asking if you have a track record etc. What the hell did you contact me for. If your a producer that can get funding on your own then do so. Hell the only way I can close a deal is if I have an investor for the project. How the hell can I get paid of the producers don’t want to do the right thing. All of a sudden SEC/Finra etc rules are brought up. Shit people has been doing these deals for years. Producers want to put you in a box(Finder etc) ok well if I had someone to find me 20 million dollars I would compensate such a finder. At the end of the day Hollywood/Producers etc are truly full of shit, but at the end of the day up front fee’s are simply ridiculous.

  102. I was often approached by Angels Den from the UK to visit their Singapore network event and I still receive emails from them to participate in some pitch meetings.

    Never give out your business plans to those kind of upfront fees companies.

    It’s a scam all the way.

  103. I think it’s a logical choice that you make.

    Get off your ass and start looking around for rich guys who are making investments and get ready to hound the daylights out of them – or take the easy way, and get someone else to get these guys to listen to your business idea.

    I think it’s fair, just because an entrepreneur who’s searching for these “angel networks” to fund his next big “world changing” idea is too fucking busy to get off his ass and find people who can help him.

    I’d say that i wouldn’t fund an entrepreneur who was too lazy to do his homework. It’s like asking someone else to do your homework and complaining that you have to pay him!

    Get real guys!

  104. The biggest problem behind pay-for-play is the *complete* lack of transparency
    in results from the groups collecting money. Provide four key stats and I’d personally
    have far less objection to the practice.

    1. How many pitches have they heard?
    2. How many deals were funded?
    3. Breakdown of investments by size
    4. What’s the average funding timeframe from pitch to depositing the cash?

    The truth is *very* few deals get angel funding. At least tell us the odds.

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