[Clarification Note: See bottom of post for FAQ about which RVC services require a fee.]
Pitching companies contact me all confused about having to pay for Pitch Academy before they pitch to investors. Another thing I get a lot of guff for is the fact that we require pitching companies to pay for their conference tickets at the Angel Capital Summit. I was told that for a pitching company to pay for the conference is like the band having to pay to attend their own show.
We have a provision where we’ll waive your fees if you pay us back with your time. For ten hours of volunteer work, you can get through our system entirely cash free. This is a community organization, we have plenty of work for volunteers. One word of warning, if you want to volunteer, you have to actually try to be helpful. Playing with your phone for hours while I handle the deluge of event attendees at the door, like one CEO that will remain nameless, is not really helpful. Understandably, founders often find that they are busy with their company and would rather just pay for the class.
Why are we gouging entrepreneurs with these horrible fees for a simple 5 minutes of air time?
[pullquote align=”right” textalign=”right” width=”30%”]At RVC we spend two days talking with investors about each company after the pitch.[/pullquote]
Wow, that really does sound bad, doesn’t it? The pitch is only the tip of the iceberg. The pitch is the public part, and from the outside it looks like all we do is pitch companies every month and take their hard earned cash.
Actually, we do a quite a bit more than that.
By the time a company pitches with RVC, we’ve already had reviewers vetting their company and determining if they are ready for investment. It would be a huge disservice for us to pitch companies randomly, or just have them get in line and pitch when they wanted to. Readiness is a big deal and if we pitch a company too early, investors get the message that it’s not a good company (right or wrong). Our reviewers are experienced volunteers, but it takes hours of administrative staff time to sort, manage, and account for all the applications that come in to make sure that everyone gets fairly reviewed.
I’m really proud of this class that Peter has put together. Pitch Academy is a 4 hour class that is a drink-from-the-firehose lecture that encompasses everything we’ve learned about angels, pitching to angels, and most importantly pitching to our angels. We know who is investing right now and we know the messages that they want to hear. After the lecture, companies pitch in class and get constructive comments.
This class is always full even when we run an extra class in the month. People take Pitch Academy before they even apply to pitch just so they know what they are getting themselves into with angel investing.
Attending Pitch Academy used to be optional. We quickly learned that it was very important. Audience members were having no trouble at all picking out the company who had not come to pitch academy and we determined that it was a disservice to pitch a company without giving them some extensive feedback first. Even good pitches seem bad when they haven’t been standardized with the current trends.
After taking the Pitch Academy class, every pitch your company does will be better, sharper, and more focused on the investment deal. We teach investor-speak.
Founders may not realize that at RVC we spend two days talking with investors about each company after the pitch. Both Peter and I manage 6 hours of investor meetings each month acting as each pitching company’s agent. We go over the pitch deck, discuss the points that investors want to learn more about, and get to the nitty gritty about what they need to move forward with due diligence. It’s important that this is done without the founder present. That anonymity gives investors a chance to talk candidly and determine what it would take for them to get involved with the deal.
RVC Investor Forum exists because of thousands of hours of investor community building done by RVC staff. We spend a lot of time working with angels to teach the skills of investing so they are educated when they approach you for negotiation. An educated angel is much easier to work with when you are closing a round.
Some have argued that instead of the entrepreneur paying fees, the angels should pay for these services. They do! We divide the costs between the entrepreneur and the angels.
Entrepreneurs think that angels are the haves and the founders are the have nots. Therefore angels should foot the bill for everything in this process. It’s important to understand that although a founder might need an angel to grow his business, an angel never needs a founder. Angels don’t have a mandate to invest like VCs do. Angel investing is a hobby, not a job, or a requirement. If we add all the fees to the angel side of the seasaw, they’ll just take their ball and go home. Nobody wants that.
If your company needs a lot of money, it makes sense for you to share your deal with High Altitude Investors in Colorado Springs or Colorado Angel Investors in Fort Collins. We often make phone calls to those groups to help get our companies on the radar in other angel communities. We are starting to form relationships with groups like First Funder and local foundations that will provide companies with non-dilutive grants that don’t require selling equity.
We try to tally up all the investments that are done in our companies. This is extremely hard to do. Last year our companies raised around $15 Million. We don’t have a fund so RVC doesn’t directly do any of that investment. Entrepreneurs love to remind me of that. Our metrics are important to show investors that RVC knows how to pick great companies that get investment. This metric also helps put Colorado on the map. Angel deals are often so quiet that you’d never know they were happening. We try to pull out the bull horn so everyone knows great things are happening with entrepreneurship in Colorado.
Do I apply through the “Coaching Cloud” which has a fee? No. “RVC Pitch Your Business” is our group in the Business Catapult. There is no fee. You can also apply through GUST.
Do I have to take the Pitch Academy to apply to pitch? No, but I have to admit it helps us to see that you are ready to pitch if you pitch in the class. If you take the class, then get accepted, you don’t have to pay for the class again. We do suggest you come back and pitch in class again (for free) to get more feedback.
How much is the Pitch Academy Class? $149 for non-members, $125 for basic members, free for keystone members.
Do I have to pay for Pitch Academy AND the ticket to the pitch event? No. When you pitch at a conference, you pay for the ticket and get coached through a volunteer pitch coach for free. When you pitch in a monthly pitch meeting, you pay for the class with Peter and Nicole and then get into the pitch meeting for free.
Do I have to take Pitch Academy to Pitch? Yes. This is non-negotiable. How you pay for it is negotiable.
Do you forsee making the Pitch Academy or the pitch process free for entrepreneurs in the future? No. We think it’s fair for founders to contribute with either their time or money. This is a community-based non-profit. We think everyone should give a little to keep RVC going for another 27 years.
RVC staff members are all angels and don’t need to take home a salary, right? Ha ha ha ha ha! Whew, that’s a good one.
Do you take a cut of the deal when investment happens? No. We can’t. It’s not legal to do that unless you are a broker-dealer. We think it’s more important to be a trusted intermediary than to become a broker-dealer or even to work with one.
Do you take a finder’s fee? Again, not legal. See above.