

A VC's take on Paying to Pitch - cwan
http://www.avc.com/a_vc/2009/10/paying-to-pitch.html

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philk
The ability (and willingness) to pay to pitch to angel investors is a filter
of a kind, but it's selecting for traits that you don't want in startup
founders:

1) An inability to network and sell - if they can't get to see angel investors
without ponying up cash, how on earth are they going to get customers?

2) A willingness to spend what is (at the time) a large portion of their
capital on something that isn't necessary. By definition if you're looking for
angel investment you aren't flush with cash and some of the amounts listed (up
to 10K), are substantial amounts of money to waste.

3) An inability to understand the role of incentives in human behavior,
specifically, if the angels they're pitching to are being paid then they're
more likely to be interested in listening (and getting money for doing so)
than actually investing.

Essentially these people are paying money to overcome their lack of
entrepreneurial ability. Why any serious angel would view these as better
candidates for investment is beyond me.

~~~
smikhanov
Because there are top-notch angels that get all the best deals with the best
entrepreneurs. I guess there are plenty of other millionaires in the Valley
looking for (reasonably) good investment in the tech field, but they can't
write "Hackers and Painters", and they can't understand hackers that good
because they made their fortune in a hedge fund. "Lack of entrepreneural
ability" may actually turn to be a provincial naïvety (think of wannabe-
entrepreneur from North Dakota who just came in Valley), and is not usually a
sign of certain failure.

[EDIT] PG also has an essay on this somewhere.

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heyrhett
I recently saw an angel investors club in Austin Tx give a talk. They require
a fee of $500 to give a pitch, but the attitude of the angels was much more
offensive to me than charging startups to pitch.

This is how they said it works: Every few months they hear 5-minute pitches
from 40 or so companies, and narrow it down to 5 on a whim. Those 5 get to
come back and give 1/2 hour pitches, and then they pick 1-2. They told us not
to worry if we don't make the top 5 since they don't really think that hard
about who should make the top 5 anyway.

What's funny is that their investment size is typically around $100k. If they
make $500 each from 40 pitches, that's $20k, or 20% of their investment.

These guys were all the same kinds of guys who were bullies in high school,
and this is just a way that they can keep bullying nerds. They're not really
really trying to make tons of money off of these fees though. Keep in mind, in
their world, everything costs a lot. It costs them $20k per year to join the
country club, etc., so they just expect that people should always pay a lot of
money to impress other people. Their angel investor club probably spends as
much money on parties and other stupid shit as they do on actual investments.

Anyway, to me, the biggest turnoff was not the actual fee, but the whole
process used by this particular angel organization.

~~~
sachinag
If this is true, then you should really publicly out them. I don't get why on
earth you would "protect the innocent". If we're all in this together, then we
need to alert each other - as loudly as we can - when we see things that
aren't right.

~~~
heyrhett
It was these guys: <http://www.centraltexasangelnetwork.com>

Their pdf says you get a 10 minute pitch, maybe that's right instead of the 5
minutes I rememembered:
[http://www.centraltexasangelnetwork.com/Resources/CTAN_Fundi...](http://www.centraltexasangelnetwork.com/Resources/CTAN_Funding_Process.pdf)

~~~
jacquesm
We should go about this a bit more structural maybe, set up a website to rate
vcs/angels ?

~~~
adw
There's thefunded.com if you like your snark with a side order of nihilism.

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jacquesm
Indeed, it is a filter of sorts. It filters out the bad VCs and angels, those
that wanted to make money OFF the startups in stead of together with.

~~~
Luyt
(Also posted in another thread) This sounds a bit like the "Own your own
business" scams. <http://skeptoid.com/episodes/4095>

