An online brouhaha broke out over angel groups that charge startups to pitch potential investors. Led by media entrepreneur Jason Calacanis, and with an echo from Fred Wilson, soon a full chorus was reciting a litany of painful experiences. The revelations are exacerbated as these “pay to pitch” sessions — questionably effective in the best of times — coincide with angel funding that continues to nosedive.
Personally, I’ve never believed entrepreneurs should pay just for the privilege of an audience; nor vice versa. This isn’t theatre. I’ve always thought the right business model requires some actual investment — the group should take a small percentage of any money that actually changes hands. This would require the facilitators both to provide innovative companies and serious investors. What is meaningful to both groups is quality, not quantity.
And with the pressure building, it looks like there might even be some impact (well, sort of) as the Keiretsu Forum asked its local chapters to stop charging pitch fees for early-stage companies raising less than $500k. It’s not clear how many of the local chapters (or the other firms that were called out) decided to waive fees but reception was lukewarm. So Calacanis launched his own angel organization. Stay tuned.