TechCrunch50′s Jason Calacanis is circulating a long rant today against angel investors who charge entrepreneurs to hear their pitches.
Maybe it’s a slow Friday for Jason too, but he calls out five groups by name — the Keiretsu Forum, Maverick Angels, privateequityforums.com, the Tech Supper Club and Angels Den UK — and claims that if they don’t stop charging, they’ll be targeted for “elimination” with “competing, fee-free events directly opposite your events,” which investors will be encouraged to boycott.
Calacanis also writes that it’s “low-class, inappropriate and predatory for a rich person to ask an entrepreneur to PAY THEM for 15 minutes of their time,” and that entrepreneurs who do pay are either “less good” or less connected, because good ideas spread naturally. “If your only option is to pay to get in front of these folks you’ve probably got an idea that is weak or bad.”
I called these groups, and two of them got back to me. Their response was the same: Nonsense.
Events are not free, according to privateequityforums.com and the Tech Supper Club, and EVERYBODY charges, including TechCrunch — you can charge entrepreneurs, investors or sponsors, or some combination of the three.
Also, they argue, they’re selling a service because they get entrepreneurs in front of serious, qualified investors, which is hard for a lone entrepreneur to do — there are costs in marketing a startup no matter how an entrepreneur chooses to spend the money.
Most interesting was the Tech Supper Club’s Zahava Stroud’s take on the cultural differences between the Bay Area and Los Angeles, where the Tech Supper Club and its sister organization, iHollywood Forum, are located (and where I happen to be this week).
Investors in LA aren’t as well known or as visible as those in the Bay Area, she said. They don’t have access to the dealflow that Bay Area investors do because there aren’t as many entrepreneurs (although more people in Los Angeles are trying to start companies now because they’ve left their jobs).
However, LA investors also like their privacy, Stroud said, because if they do get known they’re inundated with pitches from people in the film industry, and some of those ideas are not very good. Stroud said she has a database of 1,000 angel investors who want their identities kept private that it’s taken her nearly seven years to build.
So how about it? Should entrepreneurs have to pay angels to play? Maybe peHUB will get another scandal to investigate.
UPDATE: Chris Gill of the non-profit SVASE (Silicon Valley Association of Startup Entrepreneurs) just called, and they also charge entrepreneurs a small fee to cover their costs. “When I first got involved with SVASE I had the same outrage that Jason had — how can you justify charging thousands of dollars like some of these angel groups do?” Gill said. “But after awhile I realized, this is their business model. They are a funding option, and entrepreneurs can make their own choice. It’s not up to me to police this — it’s up to the market.”