Jason Calacanis (the small rectangle on the right side is me, sorry for the shameless plug)
Today Jason Calacanis (@Jason) wrote an open letter to all his mailing list subscribers expressing his frustration about Angel investors groups charging a hefty amount to hear the 10-15minutes pitch! First of all, I am afraid if any startup guy in right frame of mind will fall for it. As rightfully put by JCal, the startup guys who pay to be heard, either do not believe in their idea completely, or do not have faith in their execution.
Also, startup guys put all the hardwork, write super lean and mean code so that not an extra kilobyte will be trasferred through the gateway to save on bandwidth cost, try every open-source alternative to avoid xpensive licenses, its straight unjust for the rich folks to expect few hundred or thousand dollars for 10-15minutes of their time.
Just in case you missed the mail, or do not subscribe to the list, here’s the copy of the email. So actually this is his Rants and Raves, though it echoes my opinion. So thank you Jason for spreading our inner voice!
from Jason Calacanis <jason@calacanis.com>
to jason@binhost.com
date Fri, Oct 9, 2009 at 11:04 AM
subject [Jason] Why startups shouldn't have to pay to pitch angel investors
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[ disclaimer: written with boiling blood ]
Background/Disclaimer
=============================
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.
Why? BECAUSE THEY ARE RICH!
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?
Really?
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!
Classy.
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
P.S. 1. If you have any thoughts on this please hit reply and tell me
(I read them all).
P.S. 2. If this email was the final straw and you want to unsubscribe
just hit reply and put unsubscribe in the subject line. 
END
_______________________________________________
Jason mailing list
Jason@binhost.com
https://my.binhost.com/lists/listinfo/jason
Tags: Angel Investors, Investment, Jason Calacanis, Pitch, Startup, Venture Funding
Posted in Venture Funding |
Saw this in a post from Peter, who hosts The Silicon Valley Entrepreneur Meetup Group, some advices for startup. This list will apply to most of the startup guys out thSere. In my case, it was may be, about 90% or so.
Though we took a diversion from our inital goal, but we were compelled by the idea of the iRewardChart, the iPhone app, and executed it in few months and launched. And it was very well received by the blogger-nation, including TechCrunch. These reviews as well as many other reviews from the parenting bloggers, keep the app spreading through word of mouth.
Hmmm… I have a confession to make here. I downloaded all the podcast mp3s of ThisWeekInStartups from 
ave it! I promise, I will walk to the half way on Golden Gate Bridge and throw my Macbook into the water (as a bonus, I will throw my iPhone too), and from that day onwards I will only wear a Microsoft t-shirt!
To make sense for the topic, I will talk about VC funding and startup culture. Its changing, to say the least, and changing fast. VCs to startup companies are largely seen as recording companies to musicians. In today’s world, as a technically savvy and creative person, you can create something that will provide value to a small set of people, and solve their little bit of problem. You solve their pain point, they won’t mind paying you for your service. Where does VC come into picture?
By the very nature, every entrepreneur wants to be free - we unshackled ourselves from the corporate jungle to follow our dream. So why get into the mess again??
Some souls may agree, 
