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.
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.
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...
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.
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.
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?
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.
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!]
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.
[+] [-] patio11|14 years ago|reply
[+] [-] gfavvas|14 years ago|reply
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.
[+] [-] whenisayUH|14 years ago|reply
-----
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.
[+] [-] west1737|14 years ago|reply
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?
[+] [-] SemanticFog|14 years ago|reply
[+] [-] lawlorg|14 years ago|reply
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
[+] [-] vm|14 years ago|reply
The culture of feedback and mentorship in the valley is what makes entrepreneurship flourish here, decade after decade.
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] jayzee|14 years ago|reply
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.
[+] [-] pavelkaroukin|14 years ago|reply
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|14 years ago|reply
[+] [-] maxdemarzi|14 years ago|reply
$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|14 years ago|reply
[+] [-] kurtvarner|14 years ago|reply
[+] [-] int3rnaut|14 years ago|reply
[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|14 years ago|reply
[Edited to add: But if anyone is charging more than a nominal fee, run away!]
[+] [-] philco|14 years ago|reply
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.
[+] [-] kurtvarner|14 years ago|reply
[+] [-] harryh|14 years ago|reply
http://en.wikipedia.org/wiki/Betteridges_Law_of_Headlines
[+] [-] jgershen|14 years ago|reply
[+] [-] jroseattle|14 years ago|reply
Anyone who says otherwise generally benefits from the result.
[+] [-] mattadams|14 years ago|reply
[+] [-] jpdoctor|14 years ago|reply
LOL it's predatory? What exactly do they think the VCs' business is?
[+] [-] unknown|14 years ago|reply
[deleted]