Say no to pay-to-pitch schemes!

The dust-up yesterday in the Lean-Startup-Circle-Boston mailing list about yet another pay-to-pitch scheme is pretty distressing to me personally. I think it is unfortunate that these schemes are actually allowed to continue because they prey on the entrepreneur. Kudos to all who voiced their objections to this spam, and thanks to Abby for putting a stop to it.

I believe that pay-to-pitch schemes are a shame, and I continue to be appalled by them.

Not long ago I was a rookie entrepreneur, all wet behind the ears and looking for my first investor to fund ParElastic. And one of these “pay-to-pitch” schemes found their way into my mailbox. Naive as I was I asked for more details. Here’s part of an email I got in October 2011,

Wanted to confirm you received my previous email with the details you requested regarding the opportunity to have ParElastic recognized as one of the Top Innovators presenting to our leading group of investors at The New England Venture Summit, as well as make sure you’re aware that the first round deadline to apply is this Wednesday, October 26th. (Final deadline is November 9th).

Let me know if you’d like to submit ParElastic for a Top Innovator slot and I’ll send you the summary outline to fill out for our review.

I have also included below, an updated list of VCs confirmed to speak (more to be announced shortly).

So I sent off for the summary outline and here’s a part of the email that I got in response.

Fee to present: $1,485 (there is no fee to apply)

The deadline for company submissions is November 9th, 2011.

OK, I never pitched at NEVS 2011. I think it is a shame for people to actually attempt to gouge an entrepreneur almost $1,500 for the opportunity to pitch a bunch of potential investors. (The gall of it, to say it is $1,485, no fee to apply). I heard also of an angel group near Boston that charged entrepreneurs to have the opportunity to pitch. I swore not to pitch to such folks and I did not have to (luckily).

Many have written about the scourge of pay-to-pitch. From the Foundry Group blog, an article by Jason Mendelson, from Sajad Ghanizada’s blog, from the Driven Forward blog, from Fred Wilson’s blog,

I know the feeling of desperation at wanting to get funded and I’m thankful that there are plenty of things that one should consider first.

  1. If you, as an entrepreneur spend any money on a pay-to-pitch scheme, that is money that you don’t have available for what really matters; building a product, identifying customers, and building revenue. If you have a product, you have customers and some revenue and you wish to treat this “fee” as a cost of doing business, that’s one thing. But if you are not yet at that point, don’t waste your money on pay-to-pitch schemes.
  2. The value of an introduction to a potential investor is only as good as the person from whom the introduction comes. Build your network and get introduced to potential investors through your own network.
  3. There are many organizations in the Boston area (and the same can be said in most tech communities) that can help you much more than a pay-to-pitch scheme can. A list of some that I know of are provided below. If you know of others, please post a comment.
  4. There are any number of entrepreneur focused events in the Boston area each week, find one in a topic area that is best suited for your own interests and attend a couple. You’ll find not only a lot of fellow entrepreneurs but also many opportunities to grow your own network and meet potential investors and customers. They are also a great place to hire people to join your new enterprise.

Organizations that may be able to help you!

I’m proud to be associated with organizations like TiE Boston and in particular the TiE Challenge initiative.

Local groups like MassTLC organize an unConference (the next one is November 1st) and there are tons of opportunities for mentoring and networking. Yes, I realize that the unConference is not free but if you are a 1-3 person start-up, a $180 entry fee that gives you a one year membership to MassTLC is a whole lot more reasonable than a $1,500 entry fee for a single chance to pitch.

I have not (personally) been part of the many incubators in the Boston area but my company was for over a year a resident of Dogpatch Labs in Cambridge. Techstars  used to be in the same location as well.

There are many business plan contests in the Boston area. They are a great opportunity to pitch and all of the ones that I know of have been free. If you went to one of the many fine educational institutions in the Boston area, check whether your school has one of these. Maybe there’s a “venture forum” that is part of your business school?

I was incredibly fortunate to have been introduced to Foley Hoag LLP and I know that they have helped me and many first-time entrepreneurs in the Boston area.

My experience

My own experience has been that in the Boston area there are many very successful entrepreneurs who are willing and able to help, and they do this in many ways. And most of them participate in mentoring and angel investing as a way to give back to the community.

There are many benefits to building your own network and connecting with people through that network. Yes, I agree that it is frustrating and hard for many of us introverted engineer types to actually go out there and hang out with other people and try and make connections. And the pay-to-pitch schemes prey on this frustration and desperation.

There are many things should be much higher on your list of things to pursue, before you go fritter away good money on a pay-to-pitch scheme.

 

Say no to pay-to-pitch!

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