How should the community deal with angels that charge entrepreneurs?
Some angel groups are charging desperate entrepreneurs. Here's what Jason Calacanis has to say about this:
http://calacanis.com/2009/10/13/and-now-some-smoking-guns-or-part-two-of-angels-that-charge/ How should entrepreneurs respond to scams like these?
2 Answers
Avoid them. You don't want investors who are OK with the fact that you just wasted money to pitch to them. Any investor worth a hill of beans will wonder what else you'll waste money on, and in turn, avoid you.
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Thanks for your answer. I will of course avoid them. What I think experienced entrepreneurs should also do is to share their experience, gained by making painful mistakes, so that others do not have to be on their own when facing this kind of scams. – Alexandre Gomes 15 years ago
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Very good point, Justyn. – Josh Sam Bob 15 years ago
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Curious, what about an investor who doesn't value time? Could you justify the time & cost it would take to make a pitch in front of this many investors individually? Of course, if there is a free option (Who pays for that?), I'd be all for it. – Jeff O 15 years ago
That's an interesting questions, because it looks like the network has gotten some decent media coverage (Inc. magazine) and the person behind the network is out speaking as an expert on angel financing, which will makes him look credible.
It's easy to say "buyer beware", but if the media and credible organizations are inviting the network's founder to speak as an expert, then entrepreneurs will be pulled in. Word of mouth online will help reach some people, but certainly not all.
To answer your question ... it's obvious that on an individual basis, entrepreneurs should not participate if worthwhile investors are not attending the events.
Collectively, entrepreneurs might benefit from a media campaign trying to get the business press to write cautionary columns about paying to pitch. It's an interesting story and if packaged right could catch some interest that would help educate entrepreneurs about the risks of networks charging to present.
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Thank you very much for your detailed answer. Yes, it's difficult to find useful information about who to trust in the startup world if you rely on the mainstream media to make your decisions. Maybe a "news about news" startup could disrupt the existing status quo and establish a new profitable business model for the media industry. – Alexandre Gomes 15 years ago
