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. 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.

  2. 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.

  3. 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

  4. 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.

  5. 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

  6. 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.

  7. I couldn’t agree more. Not a new thought, tho — see point #2
    from 2006: http://www.timkeane.org/2006/09/so_paul_graham_.html

    Unfortunately this has been going on for a long time.
    Look out for angelsoft.net and their premium open deals service
    that charges $250 per month to “promote” your plan to investors.

    Never, ever pay to present. it’s an old trick that grew from the
    “private tradeshow” thing.

  8. 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.

  9. 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!

  10. 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 ???

  11. 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!

  12. 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.

  13. Here are two more to add to your list of pay to pitch:

    Golden Seeds

    New York Angels

    Both are in NYC.

  14. 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.)

  15. 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.

  16. 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…

  17. 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.

  18. 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.

  19. 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.

  20. 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.

  21. 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.

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