Unlike the majority of angel networks, Keiretsu Forum charges entrepreneurs to pitch once they are screened. On December 7th, 2007, Randy Williams - founder & CEO of Keiretsu was interviewed by John Shinal (Keiretsu Forum's Randy Williams is expanding the market for angel investing). The very next day I posted a comment on his interview.
In my comment, I made the argument that Keiretsu should change its model by charging angels not entrepreneurs. I drew an analogy from the recruiting industry where headhunters no longer charge candidates as they used to 50 years ago but rather charge employers.
A week later, Maggie Jacobberger - Director of Marketing and Communications at Keiretsu, responded to my comment by explaining the process. She made the point that entrepreneurs are not charged during the screening process until they get selected to pitch. At that point, the fee, which ranges from $4,000 to $6,000 depending on the region, allows the selected entrepreneur to pitch at all the chapters of a region. For example, Keiretsu Northern California has four chapters.
With great hesitation, I decided to give it a try so I applied in Keiretsu Southern California where my company, Clupedia, resides. As it turned out, Clupedia was one of the winners. To add icing on the cake, during the event, a VC firm took a great deal of interest in Clupedia, and we are right now going through their due diligence already. This encouraged me to apply to Keiretsu in Northern California. So I went through their screening. There were about 25 angels in the room (not sponsors or service providers, which was very refreshing). They had excellent questions. Couple angels were obviously knowledgeable about our space. I truly enjoyed the interaction. Even though the atmosphere was very structured and serious, yet it was very professional, cordial, and even collegial. Imagine, we managed to crack few jokes. Sure enough, few hours later, I received a message saying that Clupedia was selected to pitch to all four chapters in Northern California.
The bottom line is that I ended up paying two fees - one for Southern and one for Northern California, and it was worth every penny because the probability for Clupedia to get funded by Keiretsu is about 90%. I will report the result in my next posting.
So Maggie, I don't know how you did it but you converted a skeptic into an evangelist without even knowing it. So, I stand corrected and I do want to thank you for taking the initiative. Finally, as a "Thank You" note, I will justify the fee for you, which you should have done in your original response. Here it is: if a venture is not solid, it won't pass the screening, and there is no cost to the entrepreneur. If the venture is good, the probability of getting funded is high, and it only takes one single investor to recoup the fee. Thus, the downside is not so low, while the upside is quite high. That's a risk that every good entrepreneur with a good venture can and should afford to take.