Charging Entrepreneurs to Submit to Angel Groups: Justified or Not?

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Jun15

Charging Entrepreneurs to Submit to Angel Groups: Justified or Not?

Jeff Jordan

Know More: Angel Groups, Best Practices, Leading Angels 2.0, Best Practices

Yesterday I had a great meeting with Bill Payne and my partner, Brock Blake. Bill is currently the Entrepreneur in Residence at the Kauffman Foundation and one of the nation's leading experts on angel investing. He spends much of his time consulting angel investors and angel groups. He has also been featured in an extremely insightful podcast on angel investing and raising money from angels.

During our meeting, the discussion briefly turned to the subject of charging entrepreneurs to submit their plans to angel groups.

Some sources have been critical of the practice. Nevertheless, a growing number of angel groups are charging entrepreneurs anywhere from $100 to $3,000 to submit their plans or present to groups.

I've spoken to many angels about this subject and I've found three primary reasons that angel groups charge entrepreneurs:

It acts as a filter for entrepreneurs who aren't serious.
It forces entrepreneurs to pay attention to guidelines set forth by the angel group. When entrepreneurs have to pay to submit, they are sure to include all of the elements that the angel group requires in their submissions.
It provides a revenue stream that covers the cost of group meetings, professional staffing, etc.

What do you think? Is charging justified? If so, how much is too much?

related entries

Valuation Panic, Part 2 -- For Angels Aug 31, 2006
How to Listen to a Pitch Aug 10, 2006
No Such Thing as Best Practices? Jul 1, 2006
Angel Investors are Failures Jun 24, 2006
Angel Bloggers Jun 19, 2006

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