Why do we charge $250?
Over the years Angel Groups have found that by charging a submission fee, they dramatically reduce the number of frivolous submissions from entrepreneurs. The logic goes that a less than serious entrepreneur will find a fee daunting, while a serious entrepreneur will find the fee a nominal cost of business.
We applied this same logic to the Investor Community and have found that it works. It’s not a perfect system, but it does act as a pretty good filter. Without it, our community would be crushed with an influx of low quality deals, and its value would be lost for both entrepreneurs and investors.
In the interest of full disclosure, we operate a global infrastructure and provide world class software tools for both Investors and Entrepreneurs. Investor Community submission fees help cover some of these costs.
Jason D. Schwartz :: Jul.15.2008 :: Angelsoft 3.0, Entrepreneur, Investor Community ::
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If you don't have $250, there is a good chance that you aren't ready for Angel funding. It is one of the reasons that the $250 filter works on a number of levels.
Our primary goal is to ensure that OPENdeals remains a source of quality deal flow. To that end, we are actively working on alternative filters such as business plan competitions and crowd sourcing. We would be happy to hear any scalable suggestions you have.
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Did you invest your life savings, and are you maxed out on all your credit cards? Where you able to convince every friend and family member you could find to contribute money to launching the idea?
Passionate entrepreneurs can't be stopped, and they'll do anything it takes to succeed.
Jason offers $100,000 as the threshold, but I've definitely heard investors talk about entrepreneurs needing to break the $500,000 point to get an idea off the ground. This all comes down to your idea, and the capital requirements for launching the company, but they want to see that you've already taken some major steps towards executing.
Its rare that anyone wants to invest in just an idea these days...
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I would thaink that its your staff's' responsibility to weed out the frivolous submissions and forward the better. Just curious I guess. 1000 clients X $250 fee = .........................
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We are a software company that the worlds early-stage investment groups use to mange deal flow. We do not weed through submissions, or present companies to groups. To be clear, we have nothing to do with funding entrepreneurs other than providing them the tools to reach investors. You can apply to groups directly through our free Group Finder. Or you can access investors in the community they are already collaborating in by posting for $250.
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This will allow you to still get your fee, to weed out frivorous apps, and the investors won't get loaded with a bunch of sour deals.
As I posted, "$250 for 30 days" I feel, is way too expensive, especial compared to other sites like Go Big and Find That Money.
By the time an entrepreneur gets done paying for access to all of these sites they would have spent the $500,000 they are seeking.
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Sincerely,
Julia
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This problem with that model is two fold.
First: If it was free to apply, our Investor Community would be crushed with submissions. The Investor Community is a community for Investors inside Angelsoft. They rely on it as a part of the funding process to finish out a round of financing if they need to look outside their group. We cannot destroy that resource for them by providing an avalanche of deals, which is what your suggestion would effectively do.
Second: If you do not have $250 to apply to the Investor Community, there is a very good chance that your company is not ready for investor financing. I know that seems harsh, but it is a reality which I have tried to explain above. Charging you after the fact would not help filter out submissions that are not ready for investors to look at them.
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I don't think it is a good idea to charge $250 for just a one-month posting. It will perhaps do more harm to you than any good. Just paying $250 can't help draw the line between "serious and frivolous" postings. That;s what you think. A commercial bank in Fremont runs a radio commercial saying every homeonwer can refinance at no cost and no closing fee, but they charge $250 for each refinance application. Everybody knows there could be a lot more frustrated applicants than successful ones. This bank's logic goes the same way you have described, "just to screen out frivolous applications".
For 1,000 postings, you may earn $25,000 up front, but my guess is that none of the 1,000 will get funding at all.
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There are actually many other sites, like GoBigNetwork, which don't charge entrepreneurs anything to apply for funding (just do a Google search for terms like "angel funding" or "startup funding".) The unfortunate truth, however, is that none of them have virtually ANY investors on the other side of the curtain, no matter what they tell you. In contrast, Angelsoft has nearly fourteen thousand investors who use the platform to manage their own deal flow, and we're happy to let you know who they are (simply look through our online Group Finder, and follow the links to each site.)
The challenge is that angel funding, even more than (actually MUCH more than) college admissions, is a completely lopsided environment, with many, many more entrepreneurs looking for investments than could possibly be funded by all of the world's angel investors. Combine that with the fact that all investors (unlike many colleges) are motivated primarily by their own economic interest, and the unfortunate, unavoidable fact is that the great, GREAT majority of entrepreneurs are going to be disappointed because they will not be funded.
So, faced with this fact pattern, what would you have angel investors or angel groups (or, for that matter, Angelsoft itself) do? At this point, simply by bringing together nearly 14,000 accredited angel investors and providing a single way to reach them, we have done something that has never before been achieved, although it's been tried dozens of times over more than 20 years.
It's important to remember that Angelsoft is simply a technology platform that is used by the investors themselves, to manage the deals on which they are working. It has been used for that (and ONLY for that) for the past four years. Our goal in opening up Open Deals to direct entrepreneur submissions was to broaden access to funding possibilities to companies, while at the same time maintaining enough of a value proposition for investors that they stick around. Otherwise, we would end up like the other four dozen sites you mentioned: all entrepreneurs...and no money.
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Most investors on that site say they have millions to lend but no company website, and most of the emails are gmail and hotmail accounts.
Angelsoft seems to at least have creditible investors, But, man you are soooo expensive.
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I will try to find the $250.00. If this is going to give me a better shot, I will have to do it.
Let's see--maybe I can eat tuna for a while-----meanwhile why don't you just take a moment and look at my website---www.pmmls.com I just could be that one in a million you are looking for..
Joan Connors
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Do you have to pay the $ 250 a month untill you find an investor ? I have paid $ 250 for a year on another service like this one but didn't get any responces. How do I know if I would get an investor to invest in me ? Times are tough right now and if I couldn't get an investor threw you on the first month I don't know if I could afford another month. This would be to fund maketing for an invention that I have so its tougher to get an investor.
Thanks,
Dave C
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It costs $250 for 30 days in the investor community. This is a non-recurring fee, so if you are interested in another 30 days, you would resubmit. We can not guarantee that you will find an investor by posting to the Investor Community. We are a software company that built the standard tool that Investors use to manage their own private deal flow. We have given entrepreneurs the tools to access those investors. The rest is up to you.
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Otherwise it seems like a pretty shady business model ... how much of your revenue is dependent on the entrepreneurs? why don't you give their idea a cursory review before charging? better yet ... why not charge more, but only after the deal is being reviewed?
I don't trust you.
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Why: The $250 is for only 30 days, most investors (And they tell you this on their websites) only go over investments they are seriously considering either once a month or quarterly.
Angelsoft only let's you submit an app to only 3 groups at a time.
So in that 30 days at the most, you would have submitted to a max of what 5 groups. If you delete your app from a group, they no longer have it for consideration.
Hence, "Down a NY rat hole"
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I founded ePlanner.com using my own scarce funds and was lucky enough to raise funds from friends and family to get our website and business to where it is now and to where it will be when the website is complete early next year. Since then, it has been difficult to find additional investors with the capital required to expand and market our service, and $250 seems like a small price to pay if it will make some serious investors aware of our proposal. We have some other leads to follow first, but if they do not work out then I will be trying our luck with a community submission.
What would be great however is more statistics from Jschwa, such as the percent of applications that end up getting serious interest or being funded and the average amount raised by those who are successful.
He mentions here that views range from an average of 13 to 22 (non video and video), but it would be more enlightening to know how many contacts each proposal gets on average.