Dear Philadelphia, This Pay-to-Pitch Nonsense Has to Stop
I recently received an email from an organization that puts on events where startups pay-to-pitch a “crowd of investors.” (I’m not going to name the organization as I know they have good intentions.) I can’t believe these events still exist. These pay-to-pitch events have been dying around the country for almost a year now. If Philadelphia is ever going to be on the roadmap as a place to start a technology business, this has to stop.
First, if you didn’t see the uprising months ago, you should check out the what Jason Calacanis, Brad Feld and Fred Wilson have to say about pay-to-pitch events.
Most startups are poor. This is especially the case for people who have decided to forego a traditional career path and start a company straight out of school. These organizations are unknowingly (and sometimes knowingly) taking advantage of young, broke entrepreneurs who think that this event will likely end in funding for their company. This simply is not the case, and the data supports it. These events will ultimately reduce the size of our ecosystem as they not only take money from these companies, they distract them and discourage them.
For those of you who don’t know what to expect at these types of events:
- Most of these events don’t even appeal to the types of investors you should be looking for. They are primarily social gatherings which attract mostly service providers and “fake” angels.
- Seriously, these events are filled with service providers, so I’m actually paying a non-trivial amount of money to reach people who are going to add me to their spam lists. Awesome.
- BONUS: I could care less about the fancy dinner and your country club. Don’t make me pay for it.
Here’s the short of it, investors need us as much as we need them. Investors by definition are the rich ones, so they should be paying these organizations to find the best companies. They should cover all the costs. If companies have to pay, then you won’t always have the best companies apply.
What’s really funny though is that the high quality investors do not like or attend these events. They don’t want to pay for an expensive lunch and a social gathering with service providers. They already have deal flow through their own networks. If you want to attract high quality investors, you should try to emulate events like the Open Angel Forum which Jason Calacanis started. This is a small, no frills event focused on bringing in really solid companies and really solid investors. A few service providers are allowed in, but they’re ones covering all the costs. By all reports, this event has been going very well all around the country. I would love to see Open Angel Forum or a similar event in Philadelphia.
I thought about censoring this post, but I couldn’t help myself. This needs to change right now. It is too important causes significant damage to our ecosystem. I’d be happy to speak with anyone who runs a pay-to-pitch event to discuss my reasoning.