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Your start-up should never have to pay money to pitch to potential investors. Several “angel groups” will express interest in your start-up only to inform you later that they charge a fee, sometimes up to $5,000.
Some of these wealthy angels argue that these fees act as a filter. First, a potential investor should be able to tell whether they are interested in you and your start-up without you needing to waive money in their face. Second, there are thousands of other investors that don’t require fees to filter their investment opportunities. As an angel investor, it is their job to filter their opportunities and manage their returns.
While it may seem like an extremely difficult uphill battle to source funds, your start-up should never have to empty its own pockets for a measly pitch. Angel investors are wealthy; that’s why they are in a position to invest in the first place. A pitch fee is a nominal amount of money to a true angel investor, yet a large sum to you and your start-up. If it talks like a scam, smells like a scam and looks like a scam…it’s probably a scam! Even if one of these so called “angel groups” that charges presentation fees actually invests in the companies that pitch to them, there are plenty of other groups and private investors that do not make you take such risk.
Jason Calacanis wrote an excellent post on this topic if you would like to learn more. He also includes a list of angel groups that are under investigation for such practices.