

Should You Pay to Pitch Your Startup? - t3mp3st
http://www.betabeat.com/2011/12/12/pay-to-pitch-how-much-is-too-much/

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patio11
It's a sign that you're entering hugely, hugely seedy territory if you ever
are asked to pay to receive offers of employment, scholarships, or investment.
First, _many_ out-and-out scams operate that way. Second, if the opportunity
were legitimate, there is an adverse selection risk. Meritorious candidates
for employment/scholarships/investment have no interest in paying to get a
chance at them, so those candidates would avoid that opportunity like the
plague. The decisionmaker, if they have two brain cells to rub together, knows
this _and charges anyway_. Why would you ever take investment from someone who
had a declared policy of only entertaining pitches from the bottom of the
barrel? (Plus, egads, what does that say about you to follow-on investors or
other parties you need to sell?)

~~~
whenisayUH
Uh oh -- The downvoting has started. Feel free to do that but please explain
where I'm missing the mark. Thanks.

\-----

I'm really not sure why entrepreneurs who I'd suspect believe in free markets
need to be coddled and "protected" from pay-to-pitch programs which at the end
of the day are just another business - some good and some bad.

Just because you're a struggling entrepreneur doesn't mean other people
shouldn't charge you or you're entitled to anything. At the end of the day, it
is the entrepreneurs' choice. If you don't have the money or if the program
doesn't seem legit, don't pay. And find another way to reach investors. If
spending $50 or $100 gets you a credible chance at $500k of seed funding and
helps accelerate your path to getting that money or getting feedback, that
seems fair.

Some pay to pitch programs may add value. And some may not. If an entrepreneur
learns that the hard way, so be it. Nobody ever said being an entrepreneur
would be easy.

~~~
duhoang
It's not about being coddled, it's about exploiting entrepreneurs who are
either desperate, or new to the game. We don't want to encourage that type of
behavior in our community.

"entrepreneur learns that the hard way, so be it."

That attitude is like saying children should learn to look both way before
crossing the street the hard way...by getting hit by a bus!

~~~
whenisayUH
How is anyone being exploited? You have a choice to pitch or not. It's not
blackmail. It may be foolish to pitch at these events, but as far as I know,
nobody is being forced into pitching or being told "you can't research this
event and our track record before signing up."

~~~
duhoang
It's like a scam...no one is forcing you to be a victim of a scam, you just
don't know better. reply

~~~
whenisayUH
"You don't know better." If an entrepreneur is that helpless, paying-to-pitch
is the least of their problems.

~~~
evgen
So it's better that you get your hand in their pocket before someone smarter
comes along the relieve them of that burdensome wad of seed capital?

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west1737
When I started my very first web business and didn't know any better, I almost
blew $1000 on a couple angel groups that I know with the wisdom of hindsight
would have been a complete waste of money. For someone who didn't know any
better, it seemed like a good deal.

The worse part isn't that it preys on startups, it's that it prays on startups
and new entrepreneurs that aren't plugged into the HN/SV scene (I was looking
at angel groups in TX).

I don't think that a nominal fee (~$10 - $20) is necessarily a bad thing (but
really, why bother?), but anything on the order of $100 or more is too much
for a startup to be spending on that type of thing- a definite red flag. What
investor would want to invest in a startup that spends all of its money
looking for financing rather than creating a great product/service?

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SemanticFog
In general I think pay-to-pitch is highly suspicious, but I'm sympathetic to
Graham Lawlor and Ultralight startups. He charges a small fee to cover
expenses and make sure people are moderately serious. There's no way he's
getting rich off of it. Pizza is included. The feedback and exposure are well
worth the minimal cost. If the fee still bothers you, then just don't pitch
there.

~~~
lawlorg
Thanks SemanticFog, I appreciate the kind words.

Running good events is very time consuming, more than people often realize.
And yet my landlord continues to "prey on" me by demanding that I pay rent.
Somehow, he fails to see comrade Calacanis' logic that everything should be
free...

Graham Lawlor - Ultra Light Startups

~~~
mindcrime
Are you in the event planning business or something? Isn't the idea for
investors to make their money via return on the investment they make in
startups?

That said, charging enough to cover the cost of pizza and what-not, that seems
reasonable. But any outfits that are charging more than a nominal fee are
highly questionable to me.

~~~
lawlorg
Yes, planning events (Ultra Light Startups) is a full-time job for me. I need
to cover pizza, etc - and my rent...

~~~
evgen
If you are playing a valuable role to investors by providing them access to
interesting new startups then they should be the ones paying you, not the
startups.

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vm
I'm a VC and these pay-to-present groups disgust me. People who charge pitch
fees aren't investors - they're in the business of nickle and diming
entrepreneurs who don't know any better.

The culture of feedback and mentorship in the valley is what makes
entrepreneurship flourish here, decade after decade.

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jayzee
It is not only an East coast thing.

I met with the folks organizing Band of Angels in the valley and after
multiple meetings and phone-calls they told me that we had been selected to
present at their event. It was free to pitch apparently but dinner was $80.

I was tempted to turn down dinner and offer to bring my subway sandwich.

I didn't end up going... for all the reasons patio11 points out.

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pavelkaroukin
I am not a founder looking for an investment (at least, yet), but $50 in USA
does not sounds bad for a lean start up. It act more as a filter than as an
income for event host IMHO. Founder probably will spend more on a hotel alone.

On the other hand, practice of not disclosing fees and charging in the range
of $1.000 - $8.000 definitely look shady.

Just my .05

~~~
lsc
what do you think it filters? Do you really think there are a large number of
low-quality companies that would be deterred from pitching by a $50 entrance
fee?

~~~
hippich
Well.. Let me show you it this way - If someone offered me a free 32" LCD good
TV - I would definitely take it. Just because it is free and it feels like it
have value.

If someone offered me it for $25 - I would pass it, since I have no place to
put it nor I have time to watch it.

Similar could be observed in .99 games at any app stores. While 99 cents is
really close to 0 cents for most US persons, still .99 games will have much
less downloads. But ones who downloaded had much bigger motivation to actually
play it and not just check it out.

Most of things should have associated costs. At least nominal. In case of such
events it is good for both pitchers and for public listening to them. It is
different topic if costs should be in dollars or some sort of efforts tho..

IMHO, as usual :)

~~~
lsc
oh man, your example really hits home:

>If someone offered me it for $25 - I would pass it, since I have no place to
put it nor I have time to watch it.

Growing up, I hunted down free and really cheap computer hardware. I've always
had a sizable stash of equipment that I'd play with, learn about, and
eventually use to run services. As I've grown older, the initial purchase
price has become less important, and the storage cost has become more
important; my current workshop/office is maybe 200-300sqft, and it's got two
people and a lot of hardware in it.

The thing is, here the cost is time, not storage space; and I think people
learn the 'time is valuable' lesson sooner. But yeah, you would be keeping out
12 year old me, which is fine. Personally, I would think that the majority of
people at these events would be past that point. dono.

You'd certainly need to apply another level of filtering; obviously you don't
want to listen to a pitch from every joker with fifty bucks, the question then
would be how much easier would that filtering process be if you first filter
out all the 12 year old lsc types for whom the fifty bucks is a big
opportunity cost. Personally, I don't think it would save you much time, but I
could be wrong.

~~~
pavelkaroukin
>> But yeah, you would be keeping out 12 year old me, which is fine.
Personally, I would think that the majority of people at these events would be
past that point. dono.

Judging solely on all rage I see about costs associated with giving a speech
at such events, I can see how it might filter non serious people. I am not
saying that $50 or $8000 is right/wrong. I am just saying - it is filter. Even
small bump in requirements tends to filter out non serious people.

Here is simple way I look at it - if you can remove 5% of total noobs and get
$1000 to spend more on marketing materials, why you shouldn't do it?

~~~
lsc
>Here is simple way I look at it - if you can remove 5% of total noobs and get
$1000 to spend more on marketing materials, why you shouldn't do it?

depends entirely on how many good prospects also get removed. A grand in
marketing materials is not a big deal if you have enough money to invest.

If it removes more unsuitable than suitable candidates, then it's a good deal;
I'm just not convinced that is what happens. I think you get some adverse
selection- The sort of people you want to invest in are going to be focusing
on their business rather than focusing on getting investment, so I suspect
you'd get vastly better results making your event 'invite only'

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maxdemarzi
That's the kind of crap we have in Chicago.
<http://fundingfeedingfrenzy.com/present-your-company/>

$330 early bird special... :(

That and "entrepreneur networking" events that are full of service companies
or software shops trying to drum up business. Lame.

~~~
timjahn
As someone who produces events for entrepreneurs in Chicago and charges for
those events, I'd love to learn more about what your ideal event looks like.

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int3rnaut
This attitude also exists in other industries[1], and while it is shifty, it's
relatively common to the degree where it's not even given a second thought or
whimper. This to me is quite unfortunate, especially considering where I am in
my life and my economic standing and I can't help but think of all the other
people in my position. Really though, the best you can do is hope that there's
good people out there that are willing to GIVE you a few minutes of their
time, and not charge for it--and then when you're in that position you
remember where you came from.

[1]Sundance Film festival charges $75 to submit a feature length film for
consideration. I've come across many film festivals, writing contests, art
shows and the like that charge you to "pitch your work". People are always
trying to pick on the starving artist eh? (Callback to PG's Hackers and
Painters).

~~~
v21
I can actually understand this. If you're running an awards ceremony, then the
payback from the winner of the competition is relatively low - hopefully they
go on to great things, and you helped them along, and establish your
reputation that way. But the costs of having 10x as many entrants is pretty
high - each of those entries has to be evaluated, hopefully by multiple
people. Each entrant is another contact to be managed, another bit of IP to
keep track of. The most important role of the fee is to reduce the number of
entrants without reducing the number of genuinely awesome entrants. That's why
Sundance's entry fee is so low - it makes it a reasonably expensive whim, but
if you're honestly got a shot, it's obviously worth doing. It still sucks, but
it's for sensible reasons, and not just for the actual revenue stream.

[Edited to add: But if anyone is charging more than a nominal fee, run away!]

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philco
The truth of the matter is that unless you have massive amounts of traction,
investors won't really care about your product at such an event. Personal
introductions into VC's is the best way to get your funding, and it acts as
the first screen of your hustle.

If you can't hustle, find someone you know in common with a VC, and convince
them to make an intro, you might not have what it takes to launch a startup.
(Hint: It's all hustle).

Get on LinkedIn, use Meeteor.com, and start uncovering the relationships that
can help you. It's not that hard, it just takes effort.

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kurtvarner
Anyone who pays to pitch their startup doesn't deserve to be funded.

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harryh
Betteridge's Law strikes again!

<http://en.wikipedia.org/wiki/Betteridges_Law_of_Headlines>

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jgershen
No.

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jroseattle
Easy answer: $0.

Anyone who says otherwise generally benefits from the result.

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mattadams
Waitaminute. Paying to pitch?? I thought ideas were a dime a dozen!

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jpdoctor
> _“It’s low-class, inappropriate and predatory for a rich person to ask an
> entrepreneur to PAY THEM for 15 minutes of their time,” he wrote._

LOL it's _predatory_? What exactly do they think the VCs' business _is_?

