Screw You Pay Me

Pay-to-Pitch Comes Creeping Back: How Much Is Too Much?

demo 09 Pay to Pitch Comes Creeping Back: How Much Is Too Much?

(flickr.com/nanpalmero)

Entrepreneurs and other startup economy workers have started complaining about rising fees of events around town—the sheer abundance of tech events in New York has us habituated to all-star panels and pizza for $0 to $5. But while $35 classes at General Assembly inspire the occasional grousing, there is one thing that seems to really get the startup community riled up: events that charge entrepreneurs to pitch.

Just over two years ago, web publisher and CEO Jason Calacanis blew this issue up by declaring war on a set of angel groups that charged founders to pitch investors. “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. “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!”

Other bloggers, VCs and web personalities such as Robert Scoble picked up the rallying cry; even the generally well-regarded New York Angels, which charges a $150 application fee, came under fire. The most egregious offender was Keiretsu Forum, which does not advertise its fees, but reportedly charges entrepreneurs between $1,000 and $8,000 to present. Keiretsu, which has chapters all over the world and bills itself as “the world’s largest angel investment community” is still in business. Maverick Angels, another group Mr. Calacanis fingered for “investigation,” is still in business and charges entrepreneurs $250 to $1,000 for its events.

Entrepreneur Greg Costikyan wrote in 2007 of the New England Venture Summit (domain expired, cache is here:

That room of 200 people is maybe 25% other entrepreneurs waiting their turn or listening to other pitches to get a better sense of how to polish their own, and maybe 50% service folks who actually want to sell you stuff, and maybe the other 25% are investors of one kind or another. Of whom the vast majority would never invest in whatever it is you’re pitching. And of the handful who remain, almost all are so junior that unless they go back foaming at the mouth with excitement, it doesn’t really help.

But that was in 2007, you say. Entrepreneurs today are smarter and leaner, and you can find all the VCs you need on Twitter.

In New York, there are a number of pitching events that charge entrepreneurs. The New York Angels still charge $150, which many in the tech scene feel is justifiably low for the service provided and the cover costs of hosting. Ultra Light Startups hosted a pitch panel last week that charged founders $50; the FundingPost recently held an event that ran $75 to present or $350 to present and participate in a lunchtime pitch practice.

So how much is too much? “I’ve always been curious as to why people think pitching should be free,” Ultra Light Startups founder Graham Lawlor wrote in an email. “I think each event is unique and startups should evaluate paying to pitch as an investment, alongside their decision of which lawyer or web host to use.  I like to believe startups that pitch at Ultra Light get far more than $50 worth of value in exposure and feedback (and sometimes prizes). I suspect the people who think pitching should be $0 are not running many events themselves.”

“I don’t think they’re necessarily bad or exploitive of founders, or that there won’t be any good companies there,” said Trevor Owens of Lean Startup Machine, a hackathon-style event that charges first time attendees $299. “On the other hand, I’ve never been to one, because I don’t need to meet investors like that. The old fashioned intro works for me and I’ve built up a network in a short time by just being involved.”

Meanwhile, New York founders we spoke to say they regularly get come-ons from pay to pitch events.

“Sadly it’s a cancer… you need to keep screening for it,” Mr. Calacanis wrote in an email to Betabeat. “Event producers get greedy and desperate…. it’s easier to sell to desperate startups looking to get venture money than do the hard work of building a conference with the support of sponsors.”

Betabeat is working on an investigation into the pay-to-pitch economy in New York City. How much is too much? Are naive founders getting ripped off by paying hundreds of dollars to pitch investors? Let us know in the comments or email ajeffries c/o observer.com.

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. phpguy says:

    If you are passionate about what you are pitching no way someone else can do a better job.

  2. 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.

  3. Geekette says:

    Graham Lawlor who states in the article “I suspect the
    people
    who think pitching should be $0 are not running many events themselves”:
    VCs agree that their job is finding the next investment worthy thing
    and this process itself costs money (overhead, travel, etc).   So in
    this context, if you cannot get VCs to sponsor or otherwise pay to
    attend your event, then it means that your event is deemed
    unworthy/unnecessary avenue for scouting potential investment.

    Job fairs and hiring companies don’t charge applicants, neither should pitch events.

    1. Geekette says:

      To Graham Lawlor who states in the article “I suspect the people who think pitching should be $0 are not running many events themselves”:

      VCs agree that their job is finding the next investment worthy thing and this process itself costs money (overhead, travel, etc).   So in this context, if you cannot get VCs to sponsor or otherwise pay to attend your event, then it means that your event is deemed unworthy/unnecessary avenue for scouting potential investment.

      Job fairs and hiring companies don’t charge applicants, neither should pitch events.

  4. Your start-up is the prize.  If you pay to pitch, you are already placing yourself in a more than needy position.

  5. Anon says:

    You missed an important point about Ultra Light Startups.  Early Birds cost 20 bucks to get in the door, and last minute people get charged 30.  So, he’s really only charging an incremental 20-30 bucks for the companies pitching… and it’s only to 8 startups.  I don’t think he’s getting rich off of the extra 200 bucks.  It probably covers the room rental. 

  6. Anon says:

    You missed an important point about Ultra Light Startups.  Early Birds cost 20 bucks to get in the door, and last minute people get charged 30.  So, he’s really only charging an incremental 20-30 bucks for the companies pitching… and it’s only to 8 startups.  I don’t think he’s getting rich off of the extra 200 bucks.  It probably covers the room rental. 

  7. The other irksome angle to these pitch events is that they become inane beauty contests. It’s like junior high school all over again. Expert judges comment on the quality of the presentations quite often missing the proposition of the business being presented. Polished presentations are important, but let’s get past criticizing preso skills and on to helping entrepreneurs with their business models.

    Another complaint, the “expert VC judges” – many with little or no operational experience – are prone to emphasize the negative. It’s human nature to find the negative and criticize it – that’s what makes someone a critic, right? And experts aren’t experts unless they’re critical. I know I generalize, but I think entrepreneurs energy is better spent contacting VCs directly or through introductions.

  8. Depends how many actual VC’s thats interested in YOUR industry are there and whether or not they are just hanging out or looking to invest. It might be worth pitching a small introduction of your project to a crowd where some might be interested and seek you ought for a more advanced introduction. 

    If you believe in your project, paying to pitch shouldn’t be an issue. Although if its over $60+ then it becomes pricey for those boot strapping or who don’t really have that type of budget…

  9. anon in manhattan says:

    great topic. i’m a complete newbie in this realm but was taken aback by the application process for an upcoming event that requires that I provide my “elevator pitch” as  part of the criteria for even being considered as an attendee. the $$ was beside the point.  is stating your pitch in advance of  the event sop? 
    naive in manhattan. 

    1. Anonymous says:

      Want to email me at ajeffries@observer.com to discuss this?

    2. Anonymous says:

      Want to email me at ajeffries@observer.com to discuss this?

    3. Anonymous says:

      Want to email me at ajeffries@observer.com to discuss this?

      1. anon in manhattan says:

        Hi Adrienne, 
        Thanks and yes. The event in question is the Women Entrepreneurs Festival 2012. 250 vetted attendees at $25o a pop.  Looks like a great event with high quality speakers. However, the festival application includes the following required info: “If you have started a business or are in the beginning stages of starting one, please give us your elevator pitch.*” They started taking apps a couple of months back and are currently on  a “wait list” basis for any new applicants. However,  let’s say someone in the nascent stages of setting up a new venture applies to attend, is turned down (or not) and they’ve just provided their elevator pitch to… who knows who?  Seems like you’re giving away your idea/pitch with no assurance of privacy whatsoever. Again, I just fell off the turnip truck in this regard so perhaps this is standard procedure for the more selective conferences . Thanks for any insight on this topic. Anon. 

      2. Anonymous says:

        I’ve not pitched personally anywhere. But WE is well-reputed. While your concern doesn’t surprise me, my guess is that most pitch competitions require you to submit the pitch in advance. 

      3. anon in manhattan says:

        Thanks, Adrienne. Much appreciate your insight. Coming from an entertainment background, the rules are different about protecting your ideas before putting them out there.  I love this site.

      4. anon in manhattan says:

        Thanks, Adrienne. Much appreciate your insight. Coming from an entertainment background, the rules are different about protecting your ideas before putting them out there.  I love this site.

      5. Anonymous says:

        I’ve not pitched personally anywhere. But WE is well-reputed. While your concern doesn’t surprise me, my guess is that most pitch competitions require you to submit the pitch in advance.