It has been a fun two weeks watching Jason Calacanis and the angel group Keiretsu Forum go head to head. It started out on Jason's top rated podcast "This Week in Startups" and culminated in him declaring a "Jihad" against Keiretsu Forum. Jason then put together a very articulate manifesto where he committed to crushing the angel investor infidels and putting them out of business.
I am having a hard time with this fight because I think both of these organizations are providing tremendous value to the startup ecosystem. As you can see from my previous blog, I am a big fan of This Week in Startups and I watch it live every week. It is by far my favorite podcast and I think Jason does an amazing job interviewing the entrepreneurs, answering the tough questions, and providing enormous value to the startup community. I also have watched Keiretsu Forum grow into to a very strong force of 850 angels that have invested nearly $200M in some great startups. It amazes me how they can consistently put together 100-200 angels every month and fund more than 50% of the startups that go through their acceleration program.
So how do I come down on the whole "should an Angel Group charge the entrepreneur to present to the angels" question? The answer is very clear and it is ABSOLUTELY NOT. I think is absurd for the startups to have to pay for this value and it should be given completely free without any strings attached. But wait a minute, I also think that my advertising company should stop charging for all the branding they have been doing, my accountant should do my books for free, and don't get me started on those damn attorneys. In fact, I think we should cut out all of the middlemen and just let the entrepreneur waltz into the local bank, have a suitcase of cash given to him, and then live like Larry and Sergey for the rest of their lives.
I think you get my point. Startups are hard and they are supposed to be hard. Jason likes to say "It's easy to start, but hard to finish", but the simple truth is the whole damn thing is hard. And it is supposed to be hard and it is good to be hard. Hard makes you strong, it makes you tough, and it makes you better. As an entrepreneur, I am not afraid of hard. I expect it and I thrive on it. In fact, if it was not hard, the market would quickly saturate and the world would not be a better place.
The reality of the situation is that to provide value, there must be a business model and to have a business model, someone needs to write a check. Yeah, I know the rich old angels should be writing the check, those greedy bastards. But what Jason does not understand is that the Keiretsu Forum is not an angel itself. They have no fund, there are no deep pockets, and they do not fly around on their corporate jet. The Keiretsu Forum is a business organization with over 50 full-time professionals that work round the clock to make sure that the process of angel investing is improved for both the angel and the entrepreneur. Both the angels and the entrepreneurs pay a nominal fee to facilitate a very important business transaction.
So what kind of value is provided? Well, probably the most obvious is that Keiretsu Forum has over 850 angel investors. Every month they go out and organize 200-300 of these angels and get them all to come to a room to meet the startups. I am a pretty connected entrepreneur, but I would have a hard time getting 10 investors to sit down at the same time even if I provided them a steak and great bottle of wine. They work with a group of the angels to pre-screen all the companies, perform a detailed business review, develop exhaustive write-ups on each company, and coach them on their presentation. They even do writes-ups to help the companies that don't make it and tell them what else they need to do to be re-considered (when was the last time your heard a VC do that?). If they pass this 4-week program, they are invited to present to the investors. Only the companies that make it through the process are charged and of those more than 50% get funded.
I am not sure, but my gut is that if you ask the entrepreneur that just got the check for $2M, I bet he is not too upset about paying the chapter's $1,500 fee. And many of the startups that went through the Keiretsu Forum have not done it once, but several times. One company raised over $12M across several of the Forum's chapters.
So, net net! The startup ecosystem is very important and having access to what I consider two great heroes of the startup world is invaluable. Jason, you keep providing the great content, insight, and even the important controversy. Keiretsu Forum, you keep our ties to this important angel community strong and keep on bringing in $20M to $30 million a year of startup capital.
As an entrepreneur, I am just going to sit back and appreciate you both!