Poking the bear - Dear VCs and Angels: Please stop participating in events where people have to pay to meet you
The other day, I noticed an event at Fordham's Lincoln Center Campus on Gary's Guide. The event was titled "Entrepreneurs Day at Fordham Midtown" and it cost $62.50 to attend, and $125 if you wanted to present your business to Steve Brotman, Mark Davis and James Kollenger. It was upsetting to me as a Fordham adjunct professor in the entrepreneurship area that we'd participate in an event that reached so deep into the pockets of would be entrepreneurs. Obviously, I didn't have anything to do with it.
But, was it worth the price of admission?
Steve is a partner at Greenhill SAVP--a recent investor in local NYC standout Mobile Commons and clearly someone who can lead a deal. Mark, on the other hand, is not a "check writer" as Chris Dixon puts it. That being said, his blog is a tremendously useful resource and he is truly a student of the industry. Still, the very fact that he does blog makes paying to pitch to him seem a bit silly, since a relevant link in the comments to your cool product or thoughtful blog post will surely get his attention. Steve is now blogging as well. So we have one deal lead, one more junior guy--both pretty accessible through their social media presence. James seems to run an advisory company called Genesys Partners. While it's not clear that he's still actively putting money to work in deals, given that most of the "recent deals" on his site are a few years old, he seems to be a pretty connected guy who can gather a party with more VCs than you can shake a stick at.
So... three seemingly smart, connected folks--only one of whom seems to be in a position to lead a traditional early stage venture deal themselves: $125
I suppose that's a pretty good bargain to the Funding Post, which charges $2,500 for a single ticket to their funding event. Interestingly enough, many of the active funds represented at the Funding Post don't even send partner level professionals to this event. I think if I was shelling out this kind of cash, I'd want to meet as many partners as I could.
Want Funding Post on the cheap? Try the New York Venture Summit--filled with largely the same people, but only $695 if you're an entrepreneur.
Put aside, for the moment, whether or not these events are worth it to entrepreneurs. Are they worth it for the investors?
Consider that these are companies that couldn't figure out a way to research the active investors in a space and find a way to get warm introductions. What are the chances that these represent the cream of the crop of the startup universe? I'll go out on a limb and say that the best deals are not coming from these types of events.
Moreover, these events are undoubtedly having the unintended effect of casting the local community, New York in this case, as lacking active investors who are interested in meeting entrepreneurs. If all of the investors sit behind a pay wall, then how startup friendly of a place will that make our city look like? Last I checked, VCs and angels were in the business of trying to see as many good deals as possible, not making it harder for people to meet them.
Some might argue that money represents a quality filter. Some, such as myself, might call bullshit on that. There's absolutely no correlation between a startup's willingness to pay a fee to meet investors and the eventual outcome of the deal. If anyone can prove otherwise, I'd be happy to eat the keyboard I typed this post on.
No, what these deals reflect is the willingness of investment professionals to accept just about any invite that comes their way to meet companies that matches open spots in their calendar--without much regard at all for what their presence means to the innovation community. When entrepreneurs see names like First Round and Firstmark, they're led to believe that pay to play is an accepted industry standard, when it isn't--or at least, it shouldn't be. If New York City is ever going to fulfill it's potential as an innovation center, step one to meeting supportive investors should not be "open your wallet".
One argument that investors might admit to privately is that they know the best deals come straight to them anyway--so it doesn't really matter if some entrepreneurs pay to attend these events. Smart entrepreneurs will figure out a way around this expense. If that's the case--if investors knowingly are supporting events that take advantage of less savvy entrepreneurs--well that just seems kind of mean, actually.
When I was at Union Square Ventures, I took some meetings and spent time with "aspirational" entrepreneurs--many folks who probably didn't have the know how or savvy to build a successful business, but who were well intentioned nonetheless. Honestly, I didn't want any kind of artificial scarcity creating business screening them out for me. I tried to spend time with them when I could because entrepreneurs, both experienced and aspirational, will always wind up running into each other. I got intros to good deals from several um... less than good deals... that I had turned down. The more helpful I was, even to a startup that wasn't going anywhere, the more I built up the brand of the firm. Some of those folks would go on to join other startups and become good networking contacts, even though their attempts at launching a company didn't work out--so the last thing I wanted to do was to built a high wall around myself to keep them out.
I think local investors need to start examining how they spend their time in the community and start getting a little more discerning about how they spend their time. Instead of attending events that are pay to play where not everyone can attend, how about offering yourself up to a local user group or free entrepreneurial community group--or even host your own event as a firm? Why make the entrepreneurs pay when you're the one who is in the business of investing. Entrepreneurs can always try to bootstrap, but VCs have to invest--its their sole purpose in life. The burden should be on them to pay to build connections.
What I would like to see is a pay to play walkout--an all out ban on participation by established, active firms on events that set too high a barrier for entrepreneur attendance. UPDATE: I'm talking specifically about events setup for the purpose of introducing entrepreneurs to investors or about financing a startup. If you want to speak at an industry conference and they happen to charge everyone, that's fine. I don't want to kill the conference industry.
It's one thing if someone needs to charge ten or twenty bucks to cover the cost of a room or pizza and beer. It's another to ask for thousands of dollars to pitch. The investors in the NY tech community have a serious branding issue when compared to their west coast peers, and only by becoming a lot more entrepreneur friendly is NYC going to be seen as with the Valley in terms of innovation support.
In it's place, I would love to see investors make an active effort to reach out to local, entrepreneur driven community groups like the NY Tech Meetup, nextNY, or the Entrepreneur's Roundtable--who all run free or very cheap events that have featured top tier, partner level investors and active angels. How about getting this many VCs to attend a BarCamp, or helping entrepreneurs self-organize, on the cheap, a FundingCamp that will be open to all regardless of their ability to pay. There's just no reason why these pay to play events should more investor participation than the nextNY listserv
And start sharing your wisdom, too. If you're blogging about the NY tech community or NY companies, add your blog to the nextNY blog, which aggregates stories about our local community. All you need to do is signup here and post about anything NY tech or startup related while adding "nextNY" as a category in your post.