I blogged about why Startup shouldn’t pay to pitch to angel investors early this year. I wrote that blog entry after discovering that a pay to pitch group is planning to set up office here in Singapore. I feel that there is a need to warn startups in Singapore regarding this pay to pitch scheme. I’m glad that SGEntrepreneurs joined me in warning all the local Entrepreneurs.
But I’m shocked and disappointed to find out today that SGEntrepreneurs is promoting an event by Angel Den. What is happening? I thought SGEntrepreneurs is against it.
I’m equally disappointed that Standard Chartered Private Bank is supporting this. Although I’m not an entrepreneur now, I know I wouldn’t use this bank if I ever want to start another company again. Why should I trust a bank that partners with a pay to pitch group?
And why is YourSingapore.com partnering this event too? What does Singapore Tourism Board have to do with startups?
Venture Capitalists, Angel Investors and Companies who associate themselves with such pay to pitch scheme should be ashamed of themselves. They are not helping the startups. They are preying on the desperate entrepreneur who is dying to find investors to fund their next big thing. I know how it feels to have an exciting business idea but no funding. And I know there will surely be some people joining these pay to pitch scheme thinking that they are really here to help. Those who are serious about helping startups will not charge them to pitch. Reputable angel investors around the world don’t charge to listen to startup pitch. Angel investors make money from investing in Startup. They will be more than happy to listen to your business pitch if it is good. If it is not good, no amount of pay to pitch scheme can help you secure funding.
And don’t give me the crap saying startups are paying for training session on how to do a good pitch. That is like those so called model talent hunter along orchard road who charge models wannabes thousands of dollars for makeup lesson and promising them modeling contracts. Yes, they do get a great lesson on how to apply makeup. I don’t know anyone getting a modeling contract thru this method.
SPRING Singapore has recently announced the Angel Investors Tax Deduction Scheme (AITD). This will encourage more Angel Investors to help the local startups. Even the Government is helping Angel Investors to help startups. I really do not see any reasons why Angel Investors should charge startups to pitch.
I strongly discourage anyone from attending the Angels Den Speedfunding on 27 July 2010. We know that startups who are interested in this “Speedfunding” need to pay US$1100. But who are the Angel Investors that will be at the event? How much funds do they have with them? We have no idea and perhaps we will never know. If you have US$1100 to spare, spend it on your business.
If you still need anymore convincing, check out Jason Calacanis Blog. He started Open Angel Forum to counter these pay to pitch scheme. I hope someone in Singapore could do something similar.
Those who promote or support this event should be ashamed of themselves. No startup should pay to pitch to angel investors.
Update: After my blog entry, SGEntrepreneurs updated their entry clarifying their stand with regards to Angel Den and pay to pitch scheme.
We want you to know that we previously had an article where Bernard argued against Angels Den and its business model of getting entrepreneurs to pay to pitch. While we still believe that paying to pitch to a bunch of strangers is not a brilliant idea, some might see it as a viable option of raising money. We don’t regret alerting this group to this avenue, but we do apologize for not warning you as to what we think of this organization’s model.
Good post to warn all about! Thumbs up!
Agreed. This is like literary in agents who charge reading fees, but more often than not it’s just a scam where they can send you a rejection slip and pocket the reading fee without even bothering to read one word of the manuscript.
I suggest you send this letter to ST forum, before this becomes the norm in Singapore with its clueless civil servants.
AngelsDen has held 3 events in Singapore. At the first a company gained $1m funding in SIX days … at the second an entrepreneur is choosing between FIVE angels who have each offered him $500k and at the third there were 42 angels to pitch to in 3 minutes. Early days, but I think we will fund three companies from that night.
Listen, its not perfect and if you don’t want to pay … don’t … but I doubt if there is a more efficient mechanism for funding companies in Singapore.
For every one company who pays we turn away 5 …. angels appreciate that we do not waste their time.
Entrepreneurs appreciate that we get them funded.
I despair of the Sing entrepreneurial scene. Here we have a mini-me blogger, self proclaimed “no longer an entrepreneur”, telling US that the funding scene is fine.
Wake up DK and applaud people bringing best practice to Singapore, they charge for their services, get over it!
Most people charge for what they do, unless they are stooopid.
I applied to them and got turned down, they suggested how I should tweak my revenue model and I will be back, chequebook in hand.
Their advice clinics where they choose who can pitch are massively oversubscribed. Why is that DK? Maybe a collective madness is sweeping Sg or maybe, just maybe, they are providing a very much needed service.
As Bob intimates above, if you cannot see the value of paying to meet 30/40 qualified angels in one night then fine, but I have tried all the usual routes and I am now really really keen to pitch at Angels’ den, especially as one of my classmates did get through … he did not get funded but met so many good people in one hour that his business has turned around … DK stop jumping on the bandwagon and find out the facts for yourself. You owe it to your readers to not just churn out the same old crap … God knows the funding scene needs a damn good kicking here … the Governments’ attempts are pitiful … try to be constructive … it doesn’t get you the headlines but does serve us much more.
Bill: $1m funding within 6 days? Wow, that is a very impressive track record.
If you don’t mind me asking, which company got a $1m funding? I’m sure local Entrepreneur websites like SGEntrepreneurs and Young Upstarts will be more than happy to cover your success story and help you help more startup in securing funding thru this very successful pay to pitch scheme. I will also be interested in covering that story on my blog.
And what about the rest who didn’t get funding? Do they get their money refunded? Or they lose their US$1100 entirely?
I am of the view that like the startup and funding ecosystem is inherently a self-correcting one.
When enough startups find that this funding method is an unrewarding, the supply of startups seeking funding this way will dry up and perhaps these angels will realize this model may not work.
On the other hand, if it is really proven to work, naturally the demand for angel money this way will increase.
Personally I think this is no worse than the admin fees charged by banks for loans. But startups should be aware that there are other sources of funding, as well as mentorship.
Stan Williams:
“Most people charge for what they do, unless they are stooopid.”
Wow, that is quite a mouthful. If this pay to pitch scheme is the market norm, then I will keep my mouth shut. But this is not the norm. Like I said, reputable angel investors around the world don’t charge to listen to startup pitch. Are you trying to imply that they are stupid too? Honestly, you need to be up to certain level to be able to call these people stupid.
I do not think this pay to pitch is “best practice”. I do not think this is the right way to get Angel Investors.
And yes, I agree that the Government’s attempt in startup scene here is pitiful. And if they don’t stop these pay to pitch scheme from coming to our shores, I think it will be even worst.
By the way Stan, I notice that you are very active in monitoring what others are saying about Angel Den. I can’t help but wonder if there is other motive behind that. Do you have some special ties or relations with Angel Den that you wish to declare before we continue this conversation?
Daniel: You know more about the other sources of funding and mentorship than me. Would you help the startups here by blogging more about them on youngupstarts.com? This would educate the startups here and allow them to make a more informed decision.
if startups are silly enough to pay for such scheme, then it says a lot about the entrepreneurs and in a way it is a self selection process NOT to fund these startups.
$1000 for 15 minutes? Those companies stupid enough to be fooled into this deserve to die.
Thumbs up. pay to pitch ? that is crazy and stupid.
I don’t know about the rest, but I myself have lots of ideas and stuff I wish I can do most of the time. but the lack of funds and lag of time will stop me from achieving it.
Angel Investors are there to help entrepreneur who in need of funds, I don’t understand the idea why I need to pay angel investor to listen to my pitch? If so, I rather not pitch the idea to the investor.
It does not mean that I pay money to pitch I will be more serious about it, if I’m serious about the idea or project, I will pitch no matter in what condition.
I support DK, I think he is right and so are many other angel investors who are supporting the idea of not paying to pitch.
Hey DK,
I am the Regional Director for Asia for AngelsDen and as I have attended all our business funding clinics (which are free) and have seen the great response the entrepreneurs get at our SpeedFunding events and as Bill mentioned above, we now have 8 companies at advanced stage of discussions or close to contract agreements in Singapore…they would not have got that funding anywhere else and Angels like entrepreneurs who are prepared to put their hands in their pocket to find that funding..its called “speculate to accumulate!”
I dont believe we have met otherwise I am sure you would have a better understanding and appreciation of what we do. I am in Singapore this Friday afternoon and would be very happy to meet you. My mobile is 9xxxxxxx.
Edited: Mobile number removed to prevent spamming. From DK
Dear fellow entrepreneurs,
There is no right or wrong at how Angels Den run their business. They have their reasons for charging that fee. If you don’t agree to it, don’t subscribe. Why waste time and energy ranting about it? Do you have other hidden motives?
Folks, I am a school drop out at age 14. I was born in Singapore but due to circumstances I cannot avoid, I did not have the privilege to get university education as started out in life with my first job as a toilet cleaner.
5-years ago, I started my 2nd business with only $3,000 capital after losing nearly $500K in my first business. I was broke, I lived on a $5 budget a day and life was hard. I also did not have a lot of business or finance knowledge. I don’t know high net worth individuals and my contact sphere were mainly IT technical geniuses.
The past 5-years I was building my business through dedication, drive and pure passion for what I do. It was only in April 2010 I heard about Angels Den but did not sign up for the Pitching Night.
After being encouraged by Andrew, and deliberating for a few days, I finally signed-up for the Angels Den Pitching Night in May 2010.
I decided to invest S$1,400 to get the experience to pitch to angel VCs and I do not have any expectations of the outcome. Even though I was reluctant initially, I thought $1,400 is a small price to pay to meet high net worth individuals whom are financially smart and savvy. Who know what could turn up from that meet?
Fast forward today, I am glad I did it as I was exposed to 20+ angel VCs and now 12 of them are following-up with me wanting to invest between S$500K to S$1 million in my business for less than 15% equity.
I am extremely grateful to Andrew, Bill and Barry for starting up Angels Den as they provided me with value, insight and the opportunity to get “smart-money” from angel VCs whom knows how to help me grow my business in Asia.
Folks, if you disagree with what Angels Den is doing, you don’t have to work with them. No one is putting a gun on your head to force you to work with them. You have a CHOICE. That’s YOUR power.
If you are an entrepreneur, you should have known or learned by now that you are here to create VALUE, to INNOVATE, to SOLVE PROBLEMS, to COLLABORATE, to CREATE SYNERGY not fight against each other.
If you want to see the change in the world, BE the change. Dr. Wayne Dyer says this, “The state of your life is nothing more than a reflection of your state of mind.”
What I feel like saying is that success is usually the result of regular and constant good judgment. However, most often than not, good judgment is the result of someone whom have made many mistakes in the past and have had many past “learning experiences”. To build one own experiences, one must be willing to make decisions and make mistakes. It is only after many “learning experiences” (bad judgment) does one have the experience.
So, go on. Make mistakes. Like I said, there is no right or wrong. Only what works and does not work for you.
Sooner or later, after many head bumps, once it gets too painful, you might finally realized that it is time to change your ways and THEN, you will realize for “Things to change, first I must change”.
So choose wisely, leverage on Angels Den. If you KNOW without a doubt your business WILL be successful, invest that S$1,499. It is a small sum to pay if you want to build a multi-million empire.
Stay driven!
Moonshi
Choice, not chance, determines your destiny. ~Aristotle
DK, I like your initial skepticism about “pay for pitch” and agree that there needs to be some serious thought given to why you would go down this path. As such maybe we all need to look a little deeper in your question of “why”, as I find the answer always lays within the problem and the obvious problem here are the fees.
Having been an entrepreneur myself for the last ten years I have had plenty of ideas but never had the people in which I could pitch those ideas to. In addition to that one of the things I have learnt from my early days as an entrepreneur, where I too use to bitch about the banks, no one understanding/listening to me etc was because I probably had an idea but had not properly researched it and built a solid, bankable business case around it. As such the fee actually works for both sides of the equation, investor and entrepreneur. Think about it from an investors point of view, they are cash rich but time poor so they draw confidence that the business cases have been vetted and the entrepreneur is confident enough in their business to pitch up the fees. From the Entrepreneur point of view they are getting access to people who are genuinely able to invest in their idea, which unless you are Steve Jobs is very hard to do, let alone find.
Having now used Angels Den myself, I was able to get done in a little under 2 hours what would have taken me months, which is get in front of multiple investors and pitch my idea. True, there were investors there that had no interest in my idea, but importantly there were five that did, all of which are very serious about my idea and are doing the due diligence on my business now. Should I not get finance out of my time with Angels Den it will be through my own planning short comings.
Which brings me back to your questions of “Why”. Why did I think it was a good idea to pay a fee to pitch my idea? I did it because I had a good idea that had been thoroughly researched and I knew I could present it. Angels Den provides a service which is a conduit that smart people with smart ideas can use to achieve their goals. I have paid tens of thousands of dollars on consultants over the last ten years, but on this night I had 40+ people rip my business plan apart and give me ideas to make it stronger, so my worst case scenario was that I paid $1,100.00 for this service.
You might also want to consider “why” very reputable and smart operations like StanChart, STB and SGEntreprener are now backing Angels Den. My opinion is that they too, having now experienced the program think it might just be a very good idea too!
just went to the angelden webby and i have formed an opinion…
angel den is just acting as a middleman… to link up entreprener and pple who has $$$…
the event is free for angel den member.. and to be an angel den member u just need to declare u r high networth individual… so now u know why StanChart is in… i can only say the whole thing is just a database collection exercise for the banks to vacuum up more high net worth individuals and for others to have a chance to network…
1,100 USD that’s just easy $$$ for this angel den…
To those who claims that SGE is supporting Angels Den,
Here is an official statement from the SGE post:
Update: We want you to know that we previously had an article where Bernard argued against Angels Den and its business model of getting entrepreneurs to pay to pitch. While we still believe that paying to pitch to a bunch of strangers is not a brilliant idea, some might see it as a viable option of raising money. We don’t regret alerting this group to this avenue, but we do apologize for not warning you as to what we think of this organization’s model.
The collective position from SGE is clear in the above message posted. Personally, I do not support Angels Den, and if I am being asked about whether a start-up should seek their help, I will just say that you can get it free by approaching better business angels and investors. Personally, I have turned down linkedin requests from the people who runs Angels Den because I don’t endorse and will want to have nothing to do with this. As an early stage investor with a track record of getting one company acquired, I buy coffee for the entrepreneurs who pitch their ideas to me and never the other way round.
Little wonder scammers like Angel’s Den are charging VCs.
http://hbr.org/2010/07/the-vc-shakeout/ar/1
What a joke. Worst thing are govt agencies supporting these bunch of scammers.
DK,
“Bernard Leong – Personally, I do not support Angels Den, and if I am being asked about whether a start-up should seek their help, I will just say that you can get it free by approaching better business angels and investors.”
If the start ups have this avenue, then they would not be looking at this option. It is usually because they are unable to find good angels and investors, and so many at the same time to hear them pitch, and “rip’ it apart so that they can improve on them as necessary. Consultants as David indicated costs much more than what is charged by Angels Den for this arrangement
It is then probably a choice, to pitch free to some one like Bernard who has turned around one company, or to 40 or more real potential angels and investors arranged by Angels Den.
There are also as Bernard indicated other avenues to pitch to angels and investors without paying this fee. In HK, many business associations arrange for such their members and sometimes the public.
Time is money and investors use Angel Dens for the purpose of being able to meet as many vetted start ups in as short a time as possible.
I have attended some of these pitching meetings organised by similar companies to Angels Den in HK, and this probably a preferred way of investors
Std Chart has been known as one of the more shrewd banks, definately more than DBS for that matter, and their support does indicated some credibility with Angels Den. However, even the most shrewd financial institutions can make an incorrect decision as well, so the entrepreuner has to judge for himself if this is an option for them.
Hi Darryl
My name is Barry Jones, and I am the Singapore Country Manager for Angels Den.
I would first like to give you some personal background. I have spent the last three years of my career working with entrepreneurs in Singapore (see http://www.maroonanalytics.com for my background). In this time, it has become clear to me that Singapore is desperately in need of an effective angel network – pretty much every early stage company I have met is struggling for funding. There is simply too big a gap between the seed stage government support that is offered, and an increasingly conservative VC community.
To give you a little perspective on the market failure we are dealing with, it is interesting to note that one of the companies I have worked with was recently featured on the SGentrepreneurs website. They have cutting edge technology, but have not been able to get funded and have been surviving on fumes for the past 18 months. They were even awarded a TECS grant, but were unable to draw it down as it would have required more equity investment in items that were excluded from the grant!
The need for an effective angel network is further borne out by the resources page on the SGentrepreneurs website. Only SVCA and BANSEA are listed. SVCA members are not interested in funding early stage deals, especially those outside the technology space. As for BANSEA, I am a member. The organization significantly lacks resources as angels are not willing to pay the membership fees, and is staffed by one part time (and overworked) employee. For this reason, hardly any deals get done. The article you featured by Meng Weng also paints a bleak picture (http://bit.ly/aMB4FP)
Building an angel network requires a considerable investment. First, you have to find and engage a deep pool of angels. Secondly, you have to spend a lot of time screening deals, plus grooming entrepreneurs to make them investor ready. Third, you need events that get everyone in the same room. To date, no-one has been willing to make this investment, not even the Singapore government. Angels Den have made that investment, and as private sector player they will seek a return. In choosing a fee structure that comprises an upfront fee to cover overheads, and a performance based fee for deals closed, they are simply replicating a model that is used in pretty much every sector of the capital markets.
Most of the criticism of “pay to pitch” you have cited comes from the US, a country with very well established angel networks (it is estimated there are 300 angel groups in the US, roughly the same as the rest of the world combined). Entrepreneurs therefore do not have far to look for angel funding. However, it seems a little erroneous to compare the Singapore with the US given there are no compelling alternatives.
Angels Den is still in its infancy in Singapore, and only time will tell if it is the solution to the problem. However, as Bill and Andrew have pointed out, it is a promising start as deals are getting done. You should also be aware that when Angels Den was founded in the UK in 2007, it received similar criticism. However, there was a similar problem that needed to be addressed. Fast forward 3 years and Angels Den is holding 5 – 6 events a month, and to date has funded over 120 companies totaling over GBP25m. The critics seem to be pretty silent now, and the model has been widely accepted.
Angels Den is not for everyone, we don’t claim it is. We provide a service which allows rapid access to an angel network, business advice and coaching in how to pitch. Entrepreneurs can weigh up the value of this service, taking into account the opportunity cost of recreating our capital network and their existing skillsets. When I meet with entrepreneurs, I am objective and transparent – I turn down the majority of entrepreneurs who get in touch with us. I am also looking at ways to reduce the cost of the service via subsidy, much in the same way that BANSEA offers a subsidized mentoring program for entrepreneurs.
I have sent you private emails, in which I will invite you to join me for a coffee to debate the issue further in person. That offer is open to anyone else who is concerned about Angels Den, my contact details are on the website. You will find that I am a passionate advocate for entrepreneurship. All I ask is an open mind, and a willingness to think a little deeper about the fundamental problem we are facing.
Best regards
Barry Jones
Barry:
“Most of the criticism of “pay to pitch” you have cited comes from the US, a country with very well established angel networks (it is estimated there are 300 angel groups in the US, roughly the same as the rest of the world combined). Entrepreneurs therefore do not have far to look for angel funding. However, it seems a little erroneous to compare the Singapore with the US given there are no compelling alternatives.”
I do agree that Singapore entrepreneurs do not have many option YET. But if we were to just keep quiet and let these pay to pitch enter our shores, it will become the norm one day. And we will never have Angel Investor who are willing to listen to entrepreneurs pitch without a fee.
Something here is fundamentally wrong. Why is the fee so high? Shouldn’t Angel Investors be earning thru funding the correct company? Why does it seems like listening to pitch is able to make a decent income too?
A scam is a scam. Frankly these kinda of angels would just create an additional air of cynicism in Singapore if allowed to propagate. They’re in Singapore cause they smell fresh meat.
Wow the amount of people from Angels Den jumping to comment on this blog post is astounding.
Not a start up myself but in the same vein that the people from Angels Den are saying “if you don’t like it, don’t participate”, I think DK is just raising awareness to let people know what they’re getting into. Nothing wrong with that, is there?
.-= Daryl Tay´s last blog ..Angry Birds On The iPhone – A Usability Lesson =-.
wow interesting argument here. Angel Den may be very successful in Europe but that does not give the entrpreneurs the whole picture.
Firstly, the European market is much bigger than the one in Singapore. That means that 5-6 events a month in UK is probably still a very small % of the entire UK market.
There are also flaws in their data – they may give you all the positive data but excluded the negative ones to create an optimistic image. So what if they have successfully pulled the string for finding funding for over 120 companies totaling more than GBP25m? it indicates nothing about the outcome of those startups, have they failed or have they thrived since they’ve receive that capital injection? Again, capital injection for 120 companies in UK is such a small % of the whole VC market…
What matters to these entrepreneurs is whether or not their business can thrive sustainably over a period of time with the funding that Angel Dens has helped them secure. The popularity of these events is absolutely irrelevant to the interests of the Entrepreneurs.
When the founders of Angels Dens claims that they have been successful, it seemed to be the case that they are more successful in earning income just by listening to the pitches (but without promise of a success outcome for those entrepreneurs who are paying for that.)
However i do appreciate that Angel Dens, with the funding they secure for those startups, gives those entrepreneurs hope for success.
However, it seemed to me that Angels Dens model is to throw a lifesaving ring to a startup entrepreneur who is drowning in the sea without actually maximising its efforts to save them by swimming into it themselves. This is a good effort but probably not enough to be hailed as a saviour for these entrepreneurs who already to have other things in thier busines to worry about.
Angels Dens is nevertheless a good place to go if you wanted a second opinion on your business model etc. But to use it as mainstream method of gaining funding sounds rather farfetched.
I think if Angels Dens was the real deal they would have the guts to not charge the entrepreneurs until investment return has been successfully made, that would give Angels Den more credit with whatever business model they have adopted.
My company attended a pitching event with Angels Den a few months back and I wanted to share my experience of the event and process. The decision on whether to attend the event ( and pay the fees) was only made after we attended the free consultation. At no time did we feel that we were being sold to, the pros and cons were clearly laid out to us by Anrew Deane.
We pitched to eight Angels which resulted in follow up with 4 of the groups. We are currently in discussions with two. We also found the event to be a highly effective networking opportunity, both prior and after the pitch event we had the ooprtunity to meet with both entrepreneurs and investors.
What struck me was the enthusiasm of all of the entrepreneurs, I heard no negative comments either at the event or at subsequent meetings. The investors were approachable and happy to discuss our business venture as we mingled after the pitch.
I know this is not for everyone, but to us it was good value. The networking with the other entrepreneurs has also led to a potential business partnership.
The opportunities open to small companies in Singapore to get funding are not vast so having a choice ( and it is a choice) available from Angel’s Den in my book is a good thing.
Simon
Dear DK,
i have read your comments about paying for pitching vs other funding avenues…
Seems to me that your comments come from a level of naivety around funding and growing a company or idea.
Two comments stand out.. you say “I’m not an entrepreneur now” and “I know what it is like to have an exciting business idea and no funding”
Which begs a question.
Have you successfully raised capital for any venture?
If you have what amount?
Did your investors have a return?
Do you know what it actually costs to fund a venture in time & expenses?
Have you then compared that cost against a pay to pitch for example?
I would appreciate your replies?
To give you a understanding of my experience in this area?
I am entrepreneur and angel investor
Have raised over $4,000,000 from 40 plus angel investors for various ventures and personally invested over $1,000,000 in Singapore companies not to mention sweat equity as well.
Having had this experience when we evaluated the time costs and opportunity in using the Angel Den service for the latest venture it was clear to us that Angels Den was great value for money and excellent service and they factor as part of our ongoing capital and funding program.
The last comment is around costs…. it is relative to how you look at it… some people will say $1,500 wow so much and others look and say wow so little for the opportunity.
At the end of the day if you believe in your idea and venture, then a true entrepreneur will look at all possibilities and avenues with an open mind and how it will realize their business, idea or venture.
My thoughts on this subject!
They say that there is no such thing as bad publicity so we would like to thank you DK for starting this debate. At our event last week were entrepreneurs who had found out about Angels Den from reading this blog and paid to pitch at the event.
Just to let your readers know that our next event will be on **CENSORED** and we would be very happy to meet and explain how Angels Den works to any entrepreneurs reading this who are serious about getting funding. More details at http://www.angelsden.sg.
Andrew Deane
andrew – @ angelsden.com
Regional Director Asia
Angels Den Asia Pte Ltd
Update: Removed free advertising
Andrew: I’m very impressed by all the numbers you pluck out of nowhere.
Honestly, I have confidence in my readers. :)
Just for the record….Stan Williams,who has posted above,is the son of Lois Cook,co-founder of Angel’s Den.Lois is married to Bill Morrow.
Small world eh?