Questions to ask organizers of pay-to-pitch events
The internet makes it easy to put up a decent looking website and throw up some logos of angel investor groups or venture capitalists and some quotes that say things like:
- “Here are some of the past venture capitalists who’ve attended our events.”
- “Our investors currently manage $945 million or billion or trillion dollars and are looking for new ideas.”
- “Companies who’ve presented here have raised $65 million since presenting.”
All of these facts are useless marketing blather. Why?
- Bullet #1 – You don’t when they attended, in what capacity, whether they left and thought it was a scam, etc. This is social proof used to lure you in. Don’t believe it.
- Bullet #2 – Why does this matter? This is supposed to imply that these investors manage lots of money that they’re dying to give to you. This doesn’t tell you how much of their fund has been invested, whether they are actively investing and ultimately you have no idea if this number is even right.
- Bullete #3 – This is the age old correlation doesn’t imply causation issue. Companies that attended this event probably were actively out there trying to raise money and so this statistic is only relevant if the amount is attributable to fundraising that occurred as a direct result of meetings that occurred at the event. Otherwise, it is a useless intended to imply the event was the catalyst for their funding.
Here is what you should look for and ask of organizers of pay to pitch events.
- What companies were directly funded as a result of introductions made at this angel investor event in the past?
- Ask for the names and contact details of these companies so you can call them to get their impressions of the event and the angel investors attending. The organizer may want to check with the company before giving you the info, but if they hesitate and offer other nonsensical reasons not to give you the info, it’s probably because fundings never happened.
- What specific investors will be there? Get names, titles of individuals and areas/sectors of interest so you know if they are credible, real and relevant. Are they angel investors actually making investments or are they aspiring angels, e.g. pretenders.
- If they say 20 investors will be there, see if they can provide names for that many or even close. If they say, they’re still finalizing, then you can tell them to contact you when finalized. Otherwise, what happens is you show up and you learn that “at the last minute, these X investors had something come up.” That’s generally a lie. They were never committed.
How much should you pay to pitch?
There is no absolute rule on what you should pay. It depends on the value you ascribe to getting in front of these angel investors and the likelihood you cannot do it without this event. Our gut tells us a few hundred dollars could be fair and maybe even upto a thousand but it ultimately depends on the event. If you cannot figure out ways to identify and get in front of angels given the internet and tools like ChubbyBrain, a pay to pitch event may not be a panacea.
Lastly, have you thought of ways to get around the event?
If you know the investors that will be there, you now know two things. You know an investor’s name, firm, etc and you know that they are looking for interesting dealflow. Why not use your ingenuity to figure out how to get in touch with them via email or phone prior the event. This may help you save money, get some one on one time versus competing with other startups and if you decide to attend, you may already have an advocate. You may also get a sense for the questions you’ll be asked by your pre-event conversation with this angel investor.