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Watch Out Boston, a Rip Off is Coming to Town (Young Startup Ventures)

Apparently, our work to weed out unscrupulous venture events is not done.  Today, I learned that Boston entrepreneurs will be the next victims to be fleeced out of their cash in order to have the opportunity to pitch to VCs. 

To quote my partner Seth:

image

THERE IS NO CIRCUMSTANCE IN WHICH ENTREPRENEURS SHOULD PAY TO PITCH THEIR BUSINESS TO PROSPECTIVE INVESTORS.

PERIOD. END OF STORY.

 

It’s not just Seth.  Much of the credit goes to Jason Calacanis for leading the charge against such practices.  But while Jason was instrumental in dissolving a few pay-for-pitch groups, it seems like this one has managed to survive.  (Hopefully not for long).

Name:  Young Startup Ventures

Date and Location: April 21st, at the Microsoft New England Research & Development Center in Boston, MA. 

Cost to Pitch: $4,500.  (Attendance only is a hefty $1295 unless you early register for $895)

Now unlike some other events like this, there are a list of credible VCs attending and it is being held at Microsoft.  This makes it all the more worse.  I bet that some are unaware of the payment mechanism. 

Just for toppers, this group offered one company that I know a featured “Top 20 innovators spot” if they paid their bounty.  So these con artists are also trying to con the VCs on what the best companies are by who pays.  Nice work.  This just makes the whole thing dirtier than it already was.

Overheard from one VC planning to attend is that he wouldn’t fund a company that pays for access like this, as it shows they aren’t that smart.  Question why the VC is attending, I don’t know.  But I bet it’s not a unique viewpoint.

I’d encourage both entrepreneurs and VCs to boycott this event.  There is plenty of money around the table here to have an event that doesn’t steal from founders.  Most all credible VCs I know are happy to take an email from you and discuss your venture.  You showing up at an event like this isn’t necessary. 

February 10th, 2010     Categories: Financings, Venture Capital    
  • bucchere

    What about http://demo.com? Worth it or total rip-off too?

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    If they are charging for companies to pitch, then bad.  I don’t know what their current practice is.  In years past, I don’t think they did and it usually was a well received event.  But again, I don’t have the latest.  These dudes in Boston, I have specific information.

  • http://intensedebate.com/people/sethlevine675 sethlevine

    one of those VC's (briefly) was me! the young start-up guy pitched it as a mobile conference – and would I speak on a panel. when i eventually realized what it was i, of course, told him no way. sucks that you have to clarify so explicitly when people say "conference" that they mean traditional conference where speakers come for free, attendees pay and sponsors underwrite… fuck!

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    Nice to know that I didn’t flame one of my partners.  J 

  • http://intensedebate.com/people/jay_parkhil2393 Jay Parkhill

    Without getting into details of the Boston event, I don't think this whole issue is that simple. Someone needs to pay for lunch. Open Angel Forum charges "featured service providers" a $1500 fee to attend. Since service providers pay for marketing by charging their clients, the presenting companies still end up paying the presenter fee. They just pay over time to the service providers who can charge high enough rates to afford the sponsor fee. Not every presenter will hire XYZ provider either, so in the end maybe 1 presenter will end up paying for everyone.

    OTOH, at least the presenter gets some work product out of the deal so this is arguably still a step up from paying the event sponsor directly. Complicated value chain though.

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    Yeah, but 4-5k to pitch as a startup is insane.  They should be charging service providers and over time, you guys will make it up by using this as a marketing event.  This doesn’t bother me at all.  What should be happening here is that MSFT should just be paying  for it, instead of getting into bed with a bunch of rip off artists. 

    It’s the providers business model to advertise, market and do other loss leader activities.

  • http://www.aBusinessPlan.com Victoria Duff

    An entrepreneur willing to spend a few thousand to pitch just in case there is someone in attendance who might possibly be interested enough to invest money is not an entrepreneur with smarts. The 'pitch fee' would be better spent on getting the business bootstrapped. Spend that money traveling around seeking out well-connected advisory board members!

    On the other hand, I have fostered an angel group that held free sessions for invited entrepreneurs to pitch to real angel investors. I was shocked how many entrepreneurs would just not show up for this opportunity! It forced the group to start charging to present in order to assure the company would show.

    • http://intensedebate.com/people/jason4307 Jason Mendelson

      Wow, that’s really sad.  Yes, there are a lot of people who don’t know when they have good luck.  For $5k, you could hire a design firm to make your PPT better looking and a business coach to make your exec plan stronger.  (not that I would suggest doing this either, but if you are going to throw away 5 grand)…

    • http://intensedebate.com/people/ljosephlogan Joseph Logan

      That's an opportunity missed. $5K spent getting in front of customers or building awareness (read: revenue) is surely a better use of operating capital.

    • http://www.privateinvestorsforum.com valerie Gaydos

      I just posted further down but you are so right about the number of companies that mix quantity with quality. Missing the free events with real angels is so true. The Private Investors Forum tries to coach these folks on how to navigate the process and find angel investors but companies seem to want to think that you just pay a fee and they come. But we are working on it! http://www.privateinvestorsforum.com

  • lpgeffen

    I completely agree with your view on pay-for-pitch. It's crazy. It's like a lottery, which is basically a numeracy test.

  • Brett Commaille

    In South Africa, the VC’s attend as Panelists free, and we don’t charge our entrepreneurs for pitches. I’m all for being enrepreneurial, but that’s taking advantage of those often in a state of desperation. Bad form.

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  • Karl R.

    The concept of charging is not entirely bad, because Jay is right, someone has to pay for lunch. But the $5,000 is profiteering- it's a profit center, not an expense recuperation. $50 would be fair, and I think all entrepreneurs would gladly pay that to get in front of real VCs. Jason, you are spot on to call this out.

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    At $50 bucks where everyone is pitching in, I say “no problem.” 

    I’m going to try to call this out – note today’s update that MSFT dumped them and the event is off the website. 

  • http://intensedebate.com/people/boulderbliss boulderbliss

    Jason, I suspect it would die on the vine if VCs simply didn't show. So how to get them to boycott? Public shaming? Ok, maybe that's a bit harsh… I'll keep thinking.

    • http://www.privateinvestorsforum.com valerie Gaydos

      I think some of those programs simply invite the investors to be on a panel and thus, they are more than willing to be on a panel. But the real question is do they stay at teh event all day and meet the companies?

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    Or just let them know what the story is.  I’ve already heard that several of them didn’t have a clue and are thinking about not going. 

  • Richard

    Jason – what about VCs attending the AlwaysOn Venture Summit East in boston?

    i just posted on your other comment about DEMO getting support from the National Venture Capital Association as well. that's screwed up man what's up with all these pay to pitch events?

  • http://intensedebate.com/people/jason4307 Jason Mendelson

    I have no problem with VCs attending something like Always On.  I’ve been to it in the past and it was a conference – We paid, media paid, service providers and sponsors paid, companies paid little, if anything.   Don’t know what the specifics are the past 2 years – I haven’t been able to go.

    As for what’s up with all the events – got me.  Seems like the middle men in the market found a nice arbitrage to exploit.

  • Ron

    Jason – you're mistaken. AlwaysOn charges at least $6k. i have heard of companies getting in for $3k but that's rare and still too much. dont you agree?

    not to mention they charge over $1200 for cash strapped start-ups just to attend

    what do you suggest we do to get these guys Xd?

    • http://intensedebate.com/people/jason4307 Jason Mendelson

      Wow, wow, wow.  Really?  News to me.  If you can get me someone on the record who can share me the entrance signup or email chain that describes this, I’m happy to tackle.  Totally agree.

      FYI, for these guys, I had an email trail between them and a company.  What was really horrible, too, was that they waited until late in the selling process to spring the cash requirement on them.

  • Ron

    I will get that to you tomorrow. whats the best email address to reach you at?

    • http://intensedebate.com/people/jason4307 Jason Mendelson

      Jason at foundry group . com

      (foundrygroup) – one word. 

  • Ron

    Jason – as a mentor to startups, what do you suggest be the most we agree to pay to present and / or attend?

    maybe we can demand they all bring their fees down

    • http://intensedebate.com/people/jason4307 Jason Mendelson

      Now that is a good question.  Like any good ex-lawyer, I’ll say “it depends.”  But here is where my head is:

      If you are in a major city / startup ecosystem, I’d expect events like this to be covered by sponsors and service providers.  (Think law firms, accounting firms, etc..).  In the Silicon Valley, NYC, etc. – should totally be the case.

      If you are in a midmarket, you might get caught picking up some of the bill if there aren’t enough sponsor-type people around.  But we have events in Boulder all the time that don’t cost more than $100 a person.  So that is the number that stick in my head, but maybe a bit extra if food is involved. 

      I also think that folks like Jason Calacanis who is running the Open Angel Forum is able to arrange events like this that are free.  If there is someone who is willing to do all the leg work, you can usually find a free space.

      So my number is somewhere $150 or under.  Yours?

  • Ron

    thats sounds right Jason – glad to hear you agree that AlwaysOn is the next Rip Off to hit Boston. they must be called out.

    $1250 per ticket (and that's at 50% off they say)

  • Rivka

    The important aspect that has yet to be mentioned is that you need to pay to even apply to present!! Regardless of how many companies Young Start Up Ventures actually select to present, at the end of the day, they have a large sum of money just from the application fees alone. If they "convince" 150 companies to apply and only 50 are selected to present – you do the math…

    This is actually a con on three separate levels –
    1. Companies pay to present because they are promised VC’s
    2. VC’s come because they are promised new companies
    3. Service providers come because they are promised #1 and #2.

    Each level is promised the other and the Bernie Madoff puppeteer behind it all is Joe Benjamin, pulling each and every string, orchestrating a "successful event."

  • Rivka

    The important aspect that has yet to be mentioned is that you need to pay to register for the event to even apply to present!! Regardless of how many companies Young Start Up Ventures actually select to present, at the end of the day, they have a large sum of money just from the registration fees alone. If they "convince" 150 companies to apply and only 50 are selected to present – you do the math…

    This is actually a con on three separate levels –
    1. Companies pay to present because they are promised VC’s
    2. VC’s come because they are promised new companies
    3. Service providers come because they are promised #1 and #2.

    Each level is promised the other and the Bernie Madoff puppeteer behind it all is Joe Benjamin, pulling each and every string, orchestrating a "successful event."

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  • http://www.facebook.com/profile.php?id=1009550247 Mark Takata

    Jason, thank you for this post. As a founder of a new startup venture, I recently received an email from these hookwink artists. Amusingly, we’ve avoided VC funding to ensure that we continue having full control of our company, and thus far we’ve managed to stay in forward motion through self funding and a lot of long nights. When I received the email from a Mr. Dan Rose, I immediately went looking online and found your page. While it is a zero possibility that I would have pursued that shlock, it was good to find confirmation that the cold shiver that went down my spine when I read their email wasn’t just me being overly cautious.