And now, some smoking guns (or "part two of angels that charge")

Just sent to my email newsletter… you can signup for Jason’s List here:


Over 1,000 of the 17,000 people on the list have contacted me already based on my last email about angel investors that charge startups to hear their pitch. Out of those 1,000+ emails there were only two that were negative, and they both cited “free market” forces correcting the pay-for-play issue. I agree, and this email newsletter is the free market! 🙂

A number of smoking guns came in from the email list. Now, I can’t be 100% certain that these folks are telling the truth (maybe these are fake, who knows), but in the spirit of openness, I’m going to let you decided for yourself. I’ve spoken to a number of the folks below on the phone and checked out a number of their twitter, linkedin, personal blogs, and websites to see if they are who they say they are. I’m convinced these a real testimonials and I’ve personally come around to the belief that these firms prey on the naive and the desperate.

Now, there might be some good people in or around these organizations with good intentions, but they are falling way short from the perspective of the entrepreneurs. These firms are NOT going to last much longer with their current payola incarnations because the word is out. Angel investors and startups should not participate in these forums until they drop their fees–period.

Entrepreneurs know better now, and I think the new kids on the block are going to hear from elder startup statesmen that they shouldn’t participate in these bogus forums. Old entrepreneurs please protect the new ones.

Oh yeah, the Lawsuit
I’ve been informed that the Keiretsu Forum is filing a lawsuit against
me this week. If they are, my official response is: “BRING IT ON!”

Also, if anyone involved with the lawsuit is reading this, you may
want to check with your lawyers about suing someone for telling the
truth or having an opinion. Of course, you can waste the courts time
filing a frivolous lawsuit, but this will have absolutely no effect on
me because a) I know I will prevail and b) you can’t bully me with
legal fees.

I’ll sell my Tesla on eBay to pay my legal bills. :-p

… and now for a selection of feedback I’ve received.

Also, on Friday I’m going to have some of these people on This Week in Startups at 1PM pacific and you can watch live. If some Keiretsu Forum presenters who had a good experience exist, and want to come on the show, I’m totally willing to show all sides of the debate. I’d love to have Mike Segal on, but after he reads the smoking guns I think he will be suing me as well.

If you have any insider information to share just tell me if it is on or off the record when you send it.

How can you help? Write a blog post or tweet about this issue. Tell friends to NOT present at these forums.

Fighting the good fight,


Smoking Guns & Assorted Feedback
– Exhibit A: “As a former Keiretsu Forum employee, I wholeheartedly support your latest effort to end pay-to-play angel pitching.”

– Exhibit B: PrivateEquityForums/Mike Segal pitcher: “I was desperate…  I trekked to NYC to pitch them and found the room filled with I-bankers and consultants, not real investors, including Mike Segal.”

– Exhibit C: PrivateEquityForums/Mike Segal pitcher: “There were no actual investors there…. we knew it was stupid, but we were so sold on the ‘you won’t ever meet so many investors in one place.’ We were told that this is the type of event that we walk away from with funding.”

– Exhibit D: PrivateEquityForums/Mike Segal pitcher: “I was contacted by this Mike Seagal dude [sic], he harassed me to present [REMOVED] to a group of angels in NYC, didn’t mention I had to pay to present.”

– Exhibit E: Keiretsu Forum Presenter

– Exhibit F: PrivateEquityForums/Mike Segal pitcher

– Exhibit G: Fred Wilson, venture capitalist: “I agree with Jason…”

– Exhibit H: Robert Scoble, world famous blogger: “It is ridiculous startups have to pay to pitch…”

– Exhibit I: David Krug, blogger

– Exhibit J: Brad Feld, venture capitalist: “An Angel Investor Group Move That Makes Me Vomit”

– Exhibit K: Charlie O’Donnell, entrepreneur

Exhibit A: Former Keiretsu Forum Employee
“As a former Keiretsu Forum employee, I wholeheartedly support your latest effort to end pay-to-play angel pitching. Keiretsu recruited me directly out of college, yet I only worked for the company for about [REMOVED] months: the amount of time, I suppose, that it takes a
reasonable and ethical person to come to terms with the reality of this scam. There are a number of stories that I could tell you about these networks and the people that run them, and they all would reinforce that you’re doing the right thing here. For now, though, I’ll just draw attention to a few highly relevant points.

1) These networks charge because they have to. They know that they
have their business model upside down; I know that they know this
because that was the first input that I offered to the head of one of
the largest branches. After a basic strategic overview, my first input
was: “One side is your customer; the other side is your supplier. One
side has money, the other has ideas. There is one side that is, by
definition, price-insensitive, and another that is, by definition,
incredibly price-sensitive. Why would you charge the latter group?”

2) Why didn’t Keiretsu charge the investor? Because no investor was
willing to pay to be a member. While they say that they have
membership dues (and other branches may very well collect them), I
watched as a full year’s worth of membership dues went uncollected for
the branch where I worked. When I asked multiple Keiretsu investors
(off the record) what was up, they explained that, if they were
charged even a cent, they would simply terminate their membership. And
why was this the case?

3) Because Keiretsu attracted sub-par entrepreneurs, of course. For
the exact reasons that you described. The goal, in any given month,
was to have five entrepreneurs pitch, yet it was a rare month where we
could dig up that many who were willing to pay Keiretsu’s fees ($7,500
to pitch at all four regional locations). So, in reality, we were
essentially accepting anyone who was willing to pay. Most months, we
ended up letting in multiple entrepreneurs at discounted rates, just
to keep the investors happy.

4) Keiretsu has a screening process, but at least in the region where
I was employed, it was a formality. Once again, anyone who was willing
to pay the full price made it through essentially by default. My
memory’s far from perfect, so take that for what it’s worth, but I
don’t remember a paying applicant ever being turned down.

So, reflecting on these core facts, it’s easy to see why Keiretsu’s
investors were not satisfied: because we didn’t actually screen deals.
We took anyone who was willing to pay–aka the most desperate of
entrepreneurs–and they continued to show up on the off chance that a
legitimate investment opportunity might show up one of these months.
Because it didn’t legitimately screen, Keiretsu lost its credibility
with investors, and because investors weren’t willing to pay due to
lack of said credibility, Keiretsu had to keep charging entrepreneurs.

After a few months, I realized that this was no career. I had spent my
undergraduate period studying entrepreneurship at [UNIVERSITY
REMOVED], and this was a passion of mine. When I accepted a job at
Keiretsu, I had thought that I was stepping into a legitimate
profession, where I could help startups to achieve success. Instead, I
found that I was part of a parasitic business that existed only to
prey upon the desperation of entrepreneurs. It disgusted me, and
within a matter of months, I just couldn’t do it anymore. I quit, and
that’s a decision that I’ve never even remotely regretted. Frankly,
the sooner that the Keiretsu Forums of the world are gone, the better.
If there’s anything that I can do to help you, please just let me
know- I would absolutely be interested in doing my part.

Best Regards,


Exhibit B: PrivateEquityForums/Mike Segal pitcher

Can’t tell you how awesome it is you’re leading this quest. I’ve come
to f-ckin’ hate these people–particularly PrivateEquityForum and Mike
Segal. Sad to say I’ve fallen prey to them.

Here’s my shameful story: I was desperate for some way to extend my
runway and keep my employees. Being on the sad excuse for a startup
hub that is [CITYNAME REMOVED], no Angel groups were doing anything.
The only one we got a pitch with was called Tri-State PIN–another
group that should be on your hit list, with the same shady i-banker
fee structure (there you pay to apply!). So I trekked to NYC to pitch
them and found the room filled with I-bankers and consultants, not
real investors, including Mike Segal.

He claimed to like my pitch and [said] I should really consider
pitching at his event soon (PrivateEquityForums)…It’ll just be
$18000 (but “negotiable”). I ended up agreeing to pay $1200 to just be
in the room for the 5-hour long event and have him give a 1-minute
announcement about [COMPANY NAME REMOVED]. He bragged about what a
high ratio of investors to businesses would be in the room. But in
fact, there were nearly NO investors there, and all but one of the VCs
he listed as registered didn’t actually attend. It was quite clear we
companies were all paying for a lovely catered meal in an expensive
ballroom for 200 NY banker types. I felt like a f@#$ing idiot. So did
every other startup there.

The war you’re waging is bigger than just a few shady angel groups.
It’s East Coast v. West Coast. (I come from [REMOVE], and I know you
know what I’m talking about.) It’s New v. Old. Its about the old
generation being threatened by the rise of “stupid” ideas out West by
a bunch of kids like Twitter and Facebook. It’s about a city full of
ex-enterprise software salesmen ([REMOVED]) wanting the new generation
to pay their dues so they can kick back in their retirement clubs
(“Angel Groups”). It’s about sales and commissions and consultant fees
vs free and the web and product-driven business models.

You da man. Keep fighting the good fight, and lemme know if I can help.

Sincerely, [REMOVED]

Exhibit C: PrivateEquityForums/Mike Segal pitcher
I need to keep this all anon, feel free to use it, but I’m still
actively trying to work my way through getting funding, and will most
likely end up at one or more of these events as I get money… I’m a
senior in college.

So attached is all the info I got from Starlight Investments, when I
signed up to be a ‘non-presenting entrepreneur guest’, a measly
$2,450. I actually believed it so much, that my business partner and I
both dropped classes from our schedule in order to reduce our fee
bill, to get us the cash for the cost of being there. In retrospect,
we knew it was stupid, but we were so sold on the ‘you won’t ever meet
so many investors in one place’. We were told that this is the type of
event that we walk away from with funding. (in following up with the
other companies that were there, they all had the same thing to

That link is the link that they tell you is the ‘current guest list’
and from the looks of it, some of those on it are very worth meeting.
That is why I decided to attend, in hopes of meeting a few of those
companies who do not take calls, and an in-person introduction would
be very valuable.  This Excel file is who actually attended…

Note the ‘non-attending’…Basically it ended up being a 7 hour long
event of companies that had paid $14,500 ([though] talking to one,
they were able to get it down to $12.5k), to listen to them pitch
back-to-back with 30 min break out sessions every 4th company. There
were no actual investors there. It was all forums, and groups of
investment bankers (broker-dealers). I would also like to add that out
of about 100 people there, about 20 did not pay to attend. This forum
holds a block of tickets for ‘distinguished guests’. Oh, and I should
add that at 5pm, when the cocktails and jazz starts up, all the wives
and girlfriends make their way there. Which makes it extremely hard to
get any business done.

As for Mike Segal, he attends every event in the New York Metro, he is
also one of the most vocal members of the K4 chapter, Tri-State PIN,
and iBreakfast. Any angel event you go to in the New York Metro, he’s
mostly likely going to be there. When I first met him, he asked that I
call him, so I did, and this was the response I got from him:

‘[REMOVED], Thanks for getting in touch. I would be happy to speak to
you on the phone and look at your Executive Summary with a view of
possibly featuring your company or other projects at our next national
investor forum on September 24th. Unfortunately, because of the large
number of projects that are brought to my attention for funding or
advice, I do not have meetings on a non-compensated basis. I initially
charge a minimum retainer of $1,000 to $2,500, plus $475 per hour for
the time that I spend to review, evaluate and make recommendations in
connection with the funding of a business. Based upon my assessment of
the potential of the enterprise, I can then determine if it is
appropriate for me to reach to our U.S. and international network of
capital sources and/or showcase the opportunity at the national
investor forums that we organize in New York. (Note that, if your
company is selected, any payments to me would be deducted from the
fees that we charge for companies to present or attend our events.) If
you would like to be considered by the Tri-State PIN, of which I am a
member, just submit through their site at

If you are interested in working with me, you are welcome to write or
call. Payment for my fees, if applicable, can be made by credit card.

Best, Mike Segal (347) 346-6650′

Yes, he replied to my voicemail, with an email.

Basically, he will charge you to just tell you to apply through the
traditional routes to these angel forums, which also charge a healthy
fee to go to. He also will not pick up his phone, or email you, unless
you’ve made that payment. And Tri-State PIN, for last month, wanted
$625 to pitch there. (I actually considered them the most reasonable
fee of the region). And what if you actually want him to help you get
funding (like you are lead to believe that he will do for you, like
some sort of Rain Man)?  He refers you to Starlight Investments. A
’boutique bank’ out of Houston, TX, that specializes in raising
capital for companies. Though if you talk to them, they will tell you
that they only deal with companies who are already turning north of
$3m in EBITDA. But they will consider helping you raise that seed
round, with a fee of 10% of the first $2m, with a $10k/mo retainer.

Exhibit D: PrivateEquityForums/Mike Segal pitcher
Jason, I was contacted by this Mike Seagal dude, he harassed me to
present [REMOVED COMPANY NAME] to a group of angels in NYC, didn’t
mention I had to pay to present, then when I said I was interested, he
talked about those crazy fees. I never replied back, one day later he
started calling me twice a day, reducing the fees every time. Out of
curiosity, I asked about the investors who will be there, he sent me a
list of crappy names you’ve never heard of… Don’t even know if they
do exist. That was my story with this bad guy”

Exhibit E: Keiretsu Forum pitcher
“Hi Jason, I don’t think we’ve met, but I’m a repeat entrepreneur in
Silicon Valley, and a veteran of 6 startups (just getting started on
#7).  I’m easily checked out (just look on LinkedIn for our mutual
friends).  One of these days, maybe I’ll get invited to the WSJ D
poker game 🙂

In any event, I saw your blog post, and couldn’t agree with you more.

In my 20 years in Silicon Valley, I don’t know of a single person who
has raised money from any of them, including the ones who don’t
charge, like Band of Angels, Sand Hill Angels, etc.  On top of that, I
had a bad experience with Keiretsu Forum.

I met Randy Williams (founder/CEO) in [REMOVED], and pitched them on a
company I was working on.  They charged me something (I think it was
$500-1k back then, but I could be wrong), and I thought it was worth
it to reach 50 angels.  Not so. Complete idiots, no value add, and it
didn’t seem that they wrote checks to ANYONE. Since then, I’ve always
viewed Keiretsu Forum as a bit of a pyramid scheme. Randy collects
money from angels who want to join as well as pitching companies. Then
he franchises out the name to other cities (there are Keiretsu Forum
branches all over the places), and I suspect he charges them for the
privilege. I think it all adds up to a way for Randy to line his

Exhibit F: PrivateEquityForums/Mike Segal pitcher
“I read your great piece. It is very detailed and comprehensive.
Kudos. I was at a lower middle market PE firm until Spring [YEAR
REMOVED] and was invited to attend (held at
Yale Club of all places) due to my role as [REMOVED] for [REMOVED].
There was no charge to attend as I represented an investor.

Brian Emerson of Starlight Investments was also involved. I never
really like the guy….something slimy about him.

I was appalled at the sub-par quality of many of the presentations I
heard. There were CEOs (if you could call them that) who were so
incoherent in giving their presentations that some of us left the
room. I was SHOCKED to find out how much these Siegel brothers (Mike
is one, forget the other brother’s name) were charging the
entrepreneurs to present (and obviously hadn’t reviewed any
presentations at which my third grader could have done a much superior

All in all, I agree. They are scams.  Can you do everyone in the
community a favor and ADD all the on-line “venture capital forums”
that are also charging entrepreneurs a fee to have their material
shown to investors?  I have been approached by some of them and think
they are also scams.

The most important component that you can delve into is that most of
these “Forums” are serving as “finders” and they are skirting FINRA
rules, i.e. they are NOT licensed to engage in securities sales (Reg
D) etc. ”

Exhibit G: Fred Wilson, famous VC
“I agree with Jason that any angel group that charges an entrepreneur
to pitch should be avoided…. both the agent groups and startup
agents that want to charge upfront cash make the argument that it is a
quality filter. But that is nonsense. Some of the best startups I’ve
ever seen were totally broke and living and working in a friend’s
apartment. And some of the worst were well off and working in fancy
offices. The ability of a startup to pay has absolutely nothing with
the quality of the team and the idea. Like any other sector, the
startup sector has its share of scams and scam artists. I think it is
great that Jason is outing them.” — Fred Wilson, famous venture

Exhibit H: Robert Scoble, world famous blogger
“I just read Jason Calacanis’ post about angel investors who are
charging to have startups pitch them. That’s totally ridiculous. I
NEVER charge for pitches and NEVER charge to interview startups or
people for my video show or to get on building43. I don’t even ask if
you are a Rackspace customer. It’s totally ridiculous that such a
system exists.” Robert Scoble, world famous blogger

Exhibit I: David Krug, blogger
“Jason Calacanis get’s it right when he says that Angels shouldn’t be
asking Startups for cash for the time to pitch to them. First off
Angels have the cash, and the time to listen to startups, and if they
don’t have the time they shouldn’t ask startups to pay.” David Krug,

Exhibit J: Brad Feld, venture capitalist
An Angel Investor Group Move That Makes Me Vomit

Exhibit K: Charlie O’Donell, entrepreneur
Dear VCs and Angels: Please stop participating in events where people
have to pay to meet you

17 thoughts on “And now, some smoking guns (or "part two of angels that charge")

  1. What a timely blog! We are in the hunt for angel funding and just checked out the 2009 New England Venture Summit They showcase “50 Top Innovators from the technology, Cleantech, and life sciences sectors will be chosen to present their breakthrough investment opportunities to an exclusive audience of Venture Capitalists, Private Investors, Investment Bankers, Corporate Investors, and Strategic Partners.” Sounds like TechCrunch50. Cool. But here’s the fun part. On the website it says they charge $395 for investors and entrepreneurs to attend. But I had to email to get the price to present. Ready? $1495! Really? Such a deal!

  2. Solid post, Jason. As I have previously noted, I generally agree 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 that you and John Dilts (the founder and President of Maverick Angels 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. I studied procedural due procees in law school (i.e., the right to be heard) – and I think John Dilts should have an opportunity to be heard in a public forum. Thanks, Scott

  3. Jason,

    It is truly fantastic that you are taking the lead to
    change this ridiculous practice!

    If Keiretsu is stupid enough to proceed with a lawsuit, please
    don’t sell your Tesla! Instead, add a “Donate via Paypal”
    link on this page. I am sure you will get many eager
    entrepreneurs (myself included) to contribute for legal fees!

    Keep fighting!


  4. Bravo, Jason. Given that relentlessness is your superpower, you’re the perfect person to lead this crusade. Thanks for doing something so public-spirited as this. As the MLMers show, you can make oceans of money from credulous wannabe businessmen, but there’s no reason the startup world has to tolerate scummy parasitism like that.

  5. Here is the problem I have with your first blog post:
    – demanding zero fees from Angel groups treats them all like they are run by scam artists and provide zero value. That is too broad a brush.

    Most angel groups are ok and don’t rip people off. There are scammers and rip-offs who should die a slow death. I do hope Keiretsu does sue because you are right, they will loose. They are already loosing in the marketplace. But to generalize from these to say all presenting fees in all groups are bad is a non sequitur. Minimal bozo fees are ok (<$200). It provides a reasonable bozo bar and helps offset an Angel Group's cost. A well functioning Angel group will get the vast majority of it's revenue from sponsorship and membership fees with presenting fees < 10%. High fees, stock percentages are not ok. As a CEO every vendor on earth has tried to roll me for stock and high fees, accountant, lawyer, PR firm, angel group, investment banks, even Fat Boy Slim wanted 1% of my company (LOUD) to play our IPO party. I have raised over $500M for my companies and invested in over 50 start-ups as an Angel, I have seen every scam there is. The right thing for entrepreneurs to do is to tell these people to pound sand. I am not offended that they tried to scam me, it is a free world.

    Reading some of the indignation spewed forth against presenting fees you would think the Angel groups were demanding child sacrifice. Lets go ahead and expose the guys who don't deliver value. Then lets all get back to work.


  6. Here’s another group to avoid like SARS: The Growth Capital Conference in West LA. This low rent event has the temerity to get you out of bed and to their conference by 7am, probably because they couldn’t afford the venue past 10am. You get to display your product in front a few groggy-eyed “investors” for the bargain rate of $1500! Note their list of speakers is cleverly worded as past and present, but they never indicate who is present. Some listed are deceased or have been discredited as frauds. This pernicious virus of preying on ambitious but naive start-ups must stop! There’s a new sheriff in town. Jason, I think you’ve awakened a sleeping giant!

  7. anyway…paying to angel investors is not good…but on the other
    hand if you are like me and there is no access to any sort
    of investors or capital you might pay for a chance to be heard.

  8. Solution (hoping this isn’t redundant):

    But there should be a clear differentiation between slimy
    events and reputable events.

    So who decides?
    How would we know?

    I’ll propose the NVCA, or better, the Funded, or BOTH together,
    should have an event certification process and logo. EVERY VC
    and Angel group should post the logo on their sites and blogs as a PLEDGE
    to SHUN the parasite events and NOT serve on panels.

    Every startup and entrepreneur should spread the word and take
    the same pledge.

    Kill the supply of VCs and Angels, kill the demand by startups.
    When the lights go on, the cockroaches disappear.

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

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

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

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

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

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

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

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