Angels or Demons?
Angel investing has become so glorified that magnitudes of people are taking advantage of a booming startup market. Though not always a bad, it does cause a bitter/sweet scenario for entrepreneurs who are looking for funding.
I really can’t speak for the market outside of Western Canada, but what I’ve started to notice ever since having launched and failed at my first company, is that a part of the market of angel investors is really quite disturbing. I don’t believe for a second that entrepreneurship is an artform (this is art). That, however, doesn’t mean the work isn’t worthy of appreciation. Unfortunately, there is a certain sub-group of “angel investors” who really don’t seem to care about entrepreneurs or innovation whatsoever. These Machiavellians charge entrepreneurs fees to pitch them their idea.
Yes, you read that right. There are angel investment forums who actually charge to be pitched! Who does that? In fact, every stage of the screening process bears a dollar sign for the founder. Absolutely revolting.
This concept is insane. It goes to prove these
“angels” don’t respect founders whatsoever.
There is an opposing argument to this conversation: “By charging, we can get rid of the scammers and reach the real entrepreneurs.” Wrong! Charging only draws the desperate, and the unknowing entrepreneurs, not real ones.
I’m not an angel investor. However, once I’m at that point in my career, I make a promise here, that I will never, ever, ever, charge an entrepreneur to pitch me… ever.
Last summer when Taste Locally was raising it’s Angel round, I happened to contact an angel forum, VA Angels. They have offices in Kelowna, Edmonton, Calgary, Phoenix, and Winnipeg. I emailed them to clarify their screening process and what to expect. This, after all, was my first time running a startup and going through the funding process.
They proudly informed me that the first step in their process was to screen the deals over the phone to a small group of their member investors. This stage alone bore a price tag of $250… a phone conversation to screen ideas. Once completed, they compare you to all the other pitches that month and make their decisions from there. If you’re so fortunate enough to pass, you have the ability to present at any of their angel forum in any of their cities. After you cut a $1,500 cheque, that is.
How does this help the business or the founders? Why would I ever want to partner with someone that’s more concerned about taking advantage of and robbing desperate founders rather than building great businesses with hard working founders?
Honestly; think this concept through. You’re investing your money into a company because you want it to succeed so you can change the world or make lots of money. Who believes, taking money from these businesses to do so is the best way to approach this? If you do, tweet me. I’d love to know why you think it’d be such a great idea.
There are a lot of incredible angel investors who invest in amazing companies and much get pitched thousands of times per day who don’t charge. A great example would be Jason Calacanis. He’s an entrepreneur (Inside.com, This Week In Startups, and Launch) and an Angel Investor in companies like Uber, Chartbeat, Calm, and Signpost. Obviously, he’s a very busy person, yet he doesn’t scam companies and then calls himself an investor; he’s actually an angel investor. In fact, he wrote a great piece about this exact topic.
This mindset of Investor vs. Founder is dangerous. I will never pay someone to pitch my business to them. If you’re a founder looking for investors for your company/startup/business/venture, have some self-respect. Don’t fall for these scams. The equity you’re giving up is already a fair exchange for the money you receive. There are real Angel Investors who are willing to give you their time. These are the people you should pitch to.
Twitter, Instagram, Periscope, Snapchat: @iamjbecker.
Originally posted on my Medium