Startup shouldn’t pay to pitch to angel investors

I first heard about this “Pay to Pitch” scheme on TWiT few months back when Jason Calacanis was on the show. I thought such thing will only happen in America.

Well, sad to say, this “Pay to Pitch” scheme has reached our shores. A group by the name Angel Den is expanding to Singapore.

Angels Den charge startups S$1499 upfront to pitch to a group of angel investor, and takes a 5% success fee. They will be holding their first event here in March 2010.

Let me just say that nobody should be charging startup to pitch. It is just fundamentally wrong to do so. Investors (rich people) charging startups (poor people)? Something doesn’t sound right here.

Angels Den claims that the fee is to filter out people who aren’t serious. Seriously, there are many ways to filter those who aren’t serious. It is the job of an angel investor to filter out the not serious ones. Angel investors make money from investing in Startup, not charging them to pitch. And startups are doing angel investors a service by giving them the opportunity to invest in them.

If reputable angel investors don’t charge to listen to startup pitch, I don’t see why they should.

If you have a good business idea, angel investors will want to listen to your pitch, FREE. If you don’t have a good business idea, perhaps you should relook at your business plan. As a startup, you should never have to pay in order to pitch to angel investor. Never.

There are many ways that a Startup in Singapore can get funding. Examples like TECS from SPRING and i.JAM by MDA. None of them charge you to pitch.

If you are still interested to take up Angel Den’s “Pay to Pitch” scheme, please read the blog entry by Jason Calacanis before you throw in your S$1499.

14 Responses to 'Startup shouldn’t pay to pitch to angel investors'

  1. Justin Lee says:

    But a lot of them fundings will reject you flat out if you have no business proposal at all.

    It is not the idea that counts, but how you’re able to sell it. Sadly, most great ideas people aren’t salesmen.
    .-= Justin Lee´s last blog ..Diagramming and Collaboration Online Tool =-.

  2. dk says:

    Justin: But the “Pay to Pitch” thing doesn’t help you “sell your business idea” better too. It’s paying to get a chance to pitch to the angel investors. It does not increases your chance of getting fundings.

    End of the day, you still need certain skills. If you don’t have it, you need to learn it or employ/partner someone who has it.

  3. I’ll be surprised if any startups willing to pay just to pitch. Isn’t it silly to pay to pitch? If they are desperate enough, then maybe these startups deserve to fail too.

    The real test in the pudding is whether any startup eventually launch and become a success because they had paid to pitch.

    Somehow, I doubt so.

  4. hansolo says:

    Hi,

    I think Jason Calacanis’s rant on “rich people charging poor people” is misplaced.

    The fees are pocketed by the organising companies, not the angel investors.

    They are the middlemen that help to connect the startups with the angel investors, naturally they have to charge a fee for their service.

    It’s up to the startups to decide whether these fees are worth it or not. But we shouldn’t be bashing the angel investors.

    Cheers.

  5. dk says:

    hansolo: I think that angel investors shouldn’t be working with these “middle man” to begin with.

    Anyway, we aren’t sure how much money goes to them and how much go to the angel investors. Are we able to confirm that these angel investors didn’t get a single cent?

  6. Dani says:

    I think it’s atrocious that these “sharks” are taking advantage of business people who may in fact have a great idea, but just don’t have the network that includes wealthy individuals who can invest.

    I have had so many of these companies “schmooze” me until I thought I was going to get a meeting and then they drop the bomb about the “fees” for doing so…I have refused every single one of them, but it’s a time waster…

    Even the websites available to network charge and I have refused most of these as well…as “they” say – you need an introduction — and that takes networking with the right people.

  7. Robin Low says:

    Paying to Pitch is outright wrong!

    It feel so much like a scam to use “other pitcher’s” money and borrow it to some one with the best plan.

    Heck I’d do it!

  8. Stan Williams says:

    WHAT planet are you on? If it WAS about ‘rich people asking poor people” to pay then that would be “atrocious”, but even a cursory look at http://www.angelsden.sg shows that these guys are providing a service.
    Why do people here bash all new things b4 checking their facts?

    They;re Europe’s biggest angel network, held over 7000 pitches last year and DO get companies investment ready and train them how to pitch as well and boy do we need that here in my experience.

    If you have all the funding you need, don’t use them, but my experience of the ecosystem here, tells me that that they will very very welcome.
    I see that they have free drop in days (bookable on the home page) where ‘you can ask anything you want’ , my advioce is to go along and see them to make your own mind up and stop listening to uninformed rants.

  9. dk says:

    Stan: It’s like model agencies that charge people for makeup lesson, photograph session and portfolio. End of the day, do they become model or end up just paying for a bunch of dream?

    And I also believe that “pay to pitch” will be very very welcomed here. Not because we are really in need of another funding scheme. But because the startups here are ill-informed. And I think I need to inform the startup here about the controversial surrounding them so that they can make a better decision. If my blog entry don’t make any sense, nobody will bother with me and will still go ahead with these “pay to pitch” scheme.

    And I won’t call these uninformed rants. Just google for Jason Calacanis and you’ll see why he is qualified to make those comments on this “pay to pitch” scheme.

  10. Stan Williams says:

    Rubbish dk , I know it sells more column inches to be controversial, but are you looking for a raise or what?
    Have you even looked at their site?

    It is NOT like charging to be a model … they TRAIN you to pitch and help you WRITE the Business Plan and REVIEW it for investment readiness then set you up to PRESENT to a room of qualified angels …. IF start-ups ARE ill-informed, it is because they read blogs like yours, where you plagarise others blogs.
    If I was looking for money, I would love what they are doing.

    Personally I have more faith in the ecosytem than you appear to have, its always easy to follow dk … Mr Calacannis is indeed qualified, but he is also confused
    He is comparing angels who charge to meet companies, which is bad, with those companies that provide a service and help you get investment ready and spend time and effort finding angels, who actually have money, rather than those who waste our time at the BANSEA meets I’ve been to.
    If you want to compare Apples with Dragon Fruits, more fool you.

    I say, let capitalism and your “ill-informed” punters decide, not some third hand rant.
    If they meet them and then don’t want to pay they will soon go bust, but I wonder how they manage to hold 5 events a month in Europe and over 7000 pitches last year, if this is the case.
    Maybe, just maybe … they might actually be doing something useful … but then that would not get the headlines you need would it dk?

    Listen I’m just an investor, not the tech editor but I think we all need to raise our game on this island (and Yes that includes us Angels) and in my experience people are not “ill informed”, but they DO need help.
    I know at least 2 other angels who will be joining me in welcoming any angel network that can bring qualified deals to us, indeed I only wish they were coming here sooner!

  11. dk says:

    Stan: I don’t go for controversial topics and my readers knows that. There is nothing controversial about this topic.

    Since you said that Jason is confused, why not you try to convince him to remove Angel Den from his list?

    I’ve seen Angel Den’s website. I’ve also seen your explanation on why they charge. And honestly, it still looks like the “Model Agency” model to me. All these paying for them to train you, help write business plan and review your investment readiness are bullshit. Look at all the successful companies out there. How many of them uses this kind of “pay to pitch” services? Then ask yourself, if all the reputable angel investors aren’t charging, why should you be paying?

  12. Taman says:

    What a joke. “Train” to help you pitch? It sounds exactly like those modeling scams all over again.

    But stupid startups will at least get weeded out quickly.

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