Why it is Ok to Pay to Pitch

So lately there has been some hubub about startups paying to pitch, and how it is evil and blah blah blah.  David Cohen and Brad Feld went so far as to challenge a company to split fees and make it free for startups.

Alright, take a step back.  A crowd is pissed because an organization is solving a problem (sounds like a startup to me).  The price is too high and they think a group is being taken advantage of (oh, yep, I fully get that one, an extension of spec work).

Ok, we have that defined.  Price is too high and a group is being taken advantage of.  Got it.

I would never participate in one of these pay to pitch events. It goes squarely against my bootstrapping roots. 

But can we put away the pitch forks?

I’ve hung out with my fair share of angel investors and have yet to meet one that has said “you know, I just have too much money, I just want to write a check.  Know anyone?”

It just never happens.

I wrote “How To Pitch an Angel Investor” last year, stand behind my thoughts.

Putting on a quality event takes a ton of work.  A. Ton. Of. Work. By bringing out the pitchforks scares away the folks that are, at the base, trying to help startups.  I personally don’t like events like TC50 that pass on high costs to the investors.  The startups go in with a ‘we are hot shit’ attitude and expect the investors to be horny college girls just waiting for the opportunity to throw off their clothes.  Plus they charge startups to pitch in the demo pit (after campaigning they hate events that have startups pay).   Not my scene.  I am not the biggest fan of DEMO because I think they are too much and attract some skeezy startups.   There is a space for both though, and I am glad they are there.

If an organizer said “costs to put everything on and pay one employee an minimal salary, split between all the startups that want to join together to have the event,” and had a track record of great events, I would have no problem whatsoever.  Would you?

Down pitchforkers, down.

  • For me it's really more about the principle of it. At the end of the day I think it comes down to what is your true purpose/goal/mission. For those of us who are truly passionate about helping our entrepreneurs/startups in any way we can, the whole pay to pitch concept is like something that is the exact opposite of your core belief system. When I see people wanting to charge startups to pitch, that *screams* to me that their first priority isn't to help out entrepreneurs. Is it inherently bad, no… but I strongly feel like we need more people and organizations willing to give startups the opportunities they need to succeed without putting up MORE financial barriers.

    As an aside, I don't see any validity in the TC50/DemoPit argument… it's a conference and the DemoPit is like buying floor space at any other conference. Also, is TC50 passing on costs to investors or to Sponsors? I would think that's an important distinction. Investors don't need to pay to sponsor an event, they get 100s of companies coming to them all the time, but it's a way to market their brand and support entrepreneurs. This is definitely more of a win-win than the pay-to-pitch model.

  • You have to be careful with those angle investors. I have dealt with a lot of those people and either they want you to sign away your life or the rate is so high its ridiculous.

  • johnhaden

    I think events / shows are different than one on one pitches… if there are angels or VC's out there saying, ” Hey Start-up…. I'd be willing to listen to your pitch for 30 min. for $500… I think that's ludicrous …. but then again…. you have to ask yourself what self-respecting entrepreneur would pay ?

  • I agree with you, taking advantage isnt really good. The investors are the ones who pay, and in the end the companies pay as well. Really odd

  • Here's my own whistle-blowing on this side of the problem, and a few groups who perpetrated it: http://entrepreneur-in-the-trenches.posterous.com

    The problem isn't only that there exists a non-zero price for putting on the event or organizing the group, I agree. It's how high that price is relative to the probable value added to the entrepreneur by the event. Sure if the event is great, the price should be higher.

    But what if the value of the event is undemonstrated, questionable, obscured, and overplayed? Then the problem is charging a high price anyway and making the entrepreneur take on all the risk that it will pay off in the end. Like charging someone to play a card game with 1/4 odds of winning when in fact the deck is stacked and the odds are 1/100.

  • I think the distinction we have to make is between an exhibition and a pitching event. TC50 had both of these, with the people pitching not being charged, yet those who were pretty much advertising paying for theirs.

    Charging startups at a pitching event is like expecting to be paid by the caterer for food at a dinner party. The startups are the ones who are in the spotlights, who's been to a play where the lead has paid to act (apart from producer/actors)?

    If it were, in turn, a networking event/dinner, then it'd be fine to charge. Heck, there are thousands of networking events each year across the globe, charging upwards of £1k per ticket, however, those aren't startup essentials. Getting investment (for a lot of businesses, unlike myself who is also a bootstrapper and proud) is the only way forward, and charging someone with no money for the opportunity to get money is morally wrong *in my opinion*.

    Another similie; have you paid a bank manager for the opportunity for a meeting about a loan? They're busy people (like angels), control a lot of money (like angels) and have the ability to give your business its financial lifeblood (like angels).

  • I think the distinction we have to make is between an exhibition and a pitching event. TC50 had both of these, with the people pitching not being charged, yet those who were pretty much advertising paying for theirs.

    Charging startups at a pitching event is like expecting to be paid by the caterer for food at a dinner party. The startups are the ones who are in the spotlights, who's been to a play where the lead has paid to act (apart from producer/actors)?

    If it were, in turn, a networking event/dinner, then it'd be fine to charge. Heck, there are thousands of networking events each year across the globe, charging upwards of £1k per ticket, however, those aren't startup essentials. Getting investment (for a lot of businesses, unlike myself who is also a bootstrapper and proud) is the only way forward, and charging someone with no money for the opportunity to get money is morally wrong *in my opinion*.

    Another similie; have you paid a bank manager for the opportunity for a meeting about a loan? They're busy people (like angels), control a lot of money (like angels) and have the ability to give your business its financial lifeblood (like angels).

  • You're over-analyzing, dude. Obviously things like DEMO and TC50 are big events that cost real money to put together (I frequent neither, FWIW). The issue isn't big opulent events that generate huge marketing wins (that's what costs money), the issue is much more about the relatively-more-prevalent low-cost gatherings that include a pitch fee. Clearly there's a muddy gray line as you scale up the event size. Some angel groups meet in university auditoriums they don't pay for and charge entrepreneurs. It's not reasonable.

  • Scott

    If you don't need capital there's no need to pimp to the monied interests. Paying to pitch is just another example of how the MIs derive benefit from a capital position.

  • andrewhyde

    -> When I see people wanting to charge startups to pitch, that *screams* to me that their first priority isn't to help out entrepreneurs.

    Agreed, I wonder why there isn't anyone doing these types of events with an entrip slant / leaning.

  • andrewhyde

    I think it can be done right, don't see many doing it really well but I think that it could be done.

  • andrewhyde

    I really can't tell if this is spam or not.

  • andrewhyde

    Really a hard story to read. I don't think events like these make any sense, and hurt a lot of people.

    I still, for some reason, think it can be done right.

  • andrewhyde

    Agreed that there is a lot of downright horrible groups out there.

    I don't buy that it can't be done right though. Perhaps my event organizer hat is on too tight.

  • GrantG

    Holy crap, I shouldn't have opened that link at work… If it's spam, it's really well done.

  • Joe

    I say no spam if only because I can't obviously click through to some other site from the commentor's profile.

  • heyrich

    I think this gets us back to intent and who's throwing the party.

    If I were looking for funding for my startup, I'd be very very turned off by a group of investors who wanted me to pay to pitch. Sure there are expenses associated with putting on a pitchfest of some kind, but I'd really be looking for an investor who (A) had enough natural deal flow where they wouldn't be needing to put on a pay-to-pitch event and (B) was smart enough to see that the great startups would self-select out whenever there was a decent alternative.

    If, on the other hand, I lived in a place where there was a good community of startup folks and yet investors were hard to find (knock on wood if you live in Boulder), I could absolutely see US banding together to create a pitch event where we could attract a bigger group of investors. Think Ignite + BDNT. It'd be like a TechStars Demo Day for the rest of us.

    The point might be academic. Are there places where quality startup folks congregate and yet there isn't a good natural connection to investors?

  • Spam or not, she's certainly been busy: http://www.google.com/search?rlz=1C1CHMB_en-GBA

  • Joe

    Oh… I see that I didn't click far enough the first time.

    Spam say I!

  • The overreaction here is the “put down your pitchforks” comment. If you read my post that you reference, I was not railing against this nor was I challenging anyway. I was simply making a friendly offer. I'm glad that offer had an impact. While I agree that “pay to pitch” is generally wrong (and that, yes in specific instances that add great marketing value as Shawn points out – it can be done “right”), please note that the pitchforks are being carried in posts you didn't reference, written by others.

  • The overreaction here is the “put down your pitchforks” comment. If you read my post that you reference, I was not railing against this nor was I challenging anyone. I was simply making a friendly offer. I'm glad that offer had an impact. While I agree that “pay to pitch” is generally wrong (and that, yes in specific instances that add great marketing value as Shawn points out – it can be done “right”), please note that the pitchforks are being carried in posts you didn't reference, written by others.

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