Pay for Results not for Efforts or Services
There are companies who organize exclusive fund raising events by putting together entrepreneurs and VCs together for few hours for the purpose of raising funding, obviously. The organizer selects about 10 startups and coaches them on their presentation and their presentation skills.
While the majority of those organizers are just brokers peddling their mediocre services, the good ones do offer some valuable advices to entrepreneurs, especially to inexperienced ones, however they all fall short of the main objective which is funding.
Once the entrepreneurs are selected and prepared, they are paraded by the organizer in front of 10 to 20 VCs within a period of about 5 hours. Each entrepreneur has a total of 20 minutes slot consisting of 10 minutes of uninterrupted presentation and 10 minutes of Q&A. At the end of the event, each entrepreneur is handed an evaluation sheet from each VC. The service costs between $1,000 to $3,000 depending on different organizers.
On the surface, it sounds like it is a good idea, especially for VCs who now have the opportunity to look at several ventures in few hours, which would have taken them days or even weeks to achieve. From the entrepreneurs' viewpoint, it also sounds exciting because of the opportunity to present to so many VCs at once and thus increasing the probability of getting funded. However, on a closer look, the reality is much less promising to the entrepreneurs due to the following reasons:
Not as many VCs actually show up. The rest of the attendees are service providers, other presenters, or potential presenters to future events who are attending to get some exposure.
Among those VCs who do show up, only couple of them are well-established VCs (never mind the top tier ones).
The majority of VCs are not decision makers such as general partners or venture partners but associates, analysts, or principals.
The majority of VCs, especially the junior ones are window-shopping or learning the tricks of the trade at the expense of entrepreneurs.
The feedback from VCs is quite mundane. Considering that VCs are aware that entrepreneurs have paid to present, and thus, they want to be sensitive and politically correct towards not so much the entrepreneurs but the organizer with whom they have a good relationship with.
Only a very small percentage of startups get funded directly as a result of an introduction during the event, even though the organizers make it sound like the percentage is much higher.
In conclusion, and excluding some exceptions, the great majority of startups end up at best gaining some pitching experience, enhancing their presentation, sharpening their presentation skills, and making few weak connections. For inexperienced entrepreneurs, the fee might be barely justified, but for experienced ones, it is a far cry from getting funded or any meaningful step towards this ultimate objective.
Finally, here's my free advice: "If you must pay, don't pay for efforts or services, pay for results."
Dr. David Saad
Chairman & CEO