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Should You Pay to Pitch Your Startup? (betabeat.com)
34 points by t3mp3st on Dec 12, 2011 | hide | past | web | favorite | 35 comments



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?)


Agree with all these points, especially the adverse selection bias. Would you pay to apply for a job? Of course not.

Between incubators such as YC and others, hustling for intros, and Angel List, there's no reason ever to pay to pitch investors.

The ones charging $1,000-$8,000 are just robbing Peter to pay Paul. The more people they invite to pitch, the more money they make, a portion of which they will "invest" in the "winner."

These people are leeches leaches and need to be called out as such.


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.


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!


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."


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


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


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?


It's entirely possible to exploit people without holding a gun to their head (literally or figuratively).


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?


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.


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


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.


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


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.


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.


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.


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


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?


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 :)


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.


>> 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?


>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'


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).


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!]


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.


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.


You have the be kidding me... their name is the Funding Feeding Frenzy. What a joke.


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.


No.


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



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


Easy answer: $0.

Anyone who says otherwise generally benefits from the result.


> “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?




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