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 see the fee as a nominal cost of business.
We applied this same logic to the Promote tool 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–subscription fees help cover some of these costs.
Jason D. Schwartz :: Jul.15.2008 :: Entrepreneur, FAQ ::
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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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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.
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We are based in Australia for instance, so it would be great for us to know how many potential investors we can reach in Australia through the system. Sure, we may get interest from non-Australian investors, but it is a lot less likely.
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http://angelsoft.net/entrepreneurs/angel-invest...
Here you can search for angel groups who are using our system by geography. You can also search the list according to group "type" (angel investment group, Venture Capital firm, venture conference or entrepreneur event, business plan competition etc.)
I hope this helps.
Ryan Pipkin
Senior Account Executive
Angelsoft
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The group finder is fantastic for finding VCs and Angel groups etc, but it does not help to identify the break down of individual investors by location, which is more important in relation to this Investor Community submission and whether it is worthwhile depending on the location of the entrepreneur.
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You make exactly the same fault like the DEMO guys. They've lost against TC50 as they selected companies based on silly charges (10k), not merits, ideas, ability.
Investors: In which company would you rather invest: In one that throws away its money for the search of more money (to throw it away as soon as they have it) or one that rather invests its money into product development? Pretty clear.
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I know it is important to invest as much as you can in your business, and being attractive to investors, whether it be the friends and family round or Angel or even VC, is often crucial. Very few start-ups are fully funded by founders. We should all be so lucky to have the funds to bring out businesses into the black without finding outside money. As someone who is in the process and always looking for more money I have realized that a broader approach is going to increase my odds of finding the investors that are interested in what I am offering. The developers at Angelsoft and the people that invested in them have just as much right to make money as you and I in our businesses. Don't get down on the next guy for trying to make a buck. I know in marketing my product, I have to spend money to make money. The same is true with finding funding. Early investors get more for their money than the Angel will and that is what they stand to gain. In terms of what we have given away already to get where we are, this is a small investment even if it doesn't pay off.
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I am seriously bothered how they kept all of my post stating this but deleted the one where I stated that the $250 a month was misleading people and the free process was better.
You advertise that the $250 can connect us to over 14,000 investors when in reality it only connects us to 3 at a time and most investors review deals monthly or quarterly so within that 30 we might have only submitted our application to maybe 5 or 6 investors.
You (AngelSoft) even say we can only contact 3 investors at a time in your presentation under "Startup". So why not be honest here about it also?
No, company has 100% positive reviews, and you should not have a blog open to the public if you are not willing to post all of the facts.
If you are going to delete "my" post, please delete all of them and not keep the ones that benefit you only.
Thank you,
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I don't have $250 to spend but will gladly invest it (via credit) if it will expand my potential for investment through a tool that I believe in. AngelSoft has helped me build out my plan, presentation and pitch. The software is the easiest to use and simple to understand compared to competitors.
It would be nice to see facts but this is a new tool so let's give it a year.
And in closing, I resent the comment above regarding investing $250,000 or $500,000 of our own money before even being considered. There is a VERY small percentage of people that have that money availble and I thought the comment was discouraging to people like myself. I also have a hard time accepting that entrepreneurs should drain their family and friends to show that there is faith in the project. I grew up in a poor family and my friends have their own agendas - I am busting my rear to build a future for myself and my future family.
I only have investors to rely on.
-Josh
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of investors who invest each month and also post what investors invested in
what projects.
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To address Lorenzo's assertion, the average number of investors who see a posting in a month is closer to 40 or 50. Lorenzo is also mistaken about only connecting to 3 investors at a time. You may connect directly to any 3 GROUPS at a time by submitting your application directly to them through their website. Groups on Angelsoft averagely consist of 40 accredited investors, so it follows that you connect directly to around 120 angels at a time without ever submitting to OPENdeals and paying 250. After 3 direct submissions, you may apply directly to additional groups, but we simply tag your project to indicate that you have submitted on "bulk" to more than 3 groups. If you want the broader exposure that OPENdeals offers, pay us 250 and we promote your deal visibly to every group, and every member of every group. That's 380 angel groups, 45 VCs, and incubators, seed funds, and economic development groups around the world who trust in Angelsoft and represent over 14,000 accredited investors. This is very important to understand if you are seriously looking to fund your project, and utilize our website to do so.
Back in June we posted a blog about the average number of investors to view an OPENdeal posting per month. Back then, a deal with a video was receiving on average 22 views, a deal without a video 13 views, and 21% of all OPENdeals were introduced by a investor to his angel group for serious consideration by the members. Since then due to our efforts to promote OPENdeals, we have more than doubled these numbers, and we will publish more recent data soon.
You can find the old blog post at: http://blog.angelsoft.net/2008/06/26/setting-ex...
My job in business development is to communicate directly with our angel groups and VCs. I sell new groups on the benefits of adopting our platform and I sell my existing groups on the benefits of OPENdeals. We do everything we can to promote OPENdeals to our investment groups, so these numbers are continually growing.
Unfortunately, as hard as we try to collect data and statistics, we still do not have an accurate number of individual investors who invest (especially not on a per month basis). We are also obliged by our privacy policy to never disclose, "what investors invested in what projects." This data is difficult to capture because there is no way for us to require investors to give us this information. A lot of their work including investment is inevitably done through in person contact with entrepreneurs. They may never enter investment data into Angelsoft. We are working to provide investors compelling reasons to give us their investment data, such as reports and portfolio tracking, but it's still optional for them.
Based on 40 of our angel groups who DO track all their data and investment information through our tool, we know that between 1 and 2 percent of all inquiries get funded, the average investment amount from a single angel is 25,000 USD, and the average investment amount in a particular project is between .5 and 1 million USD.
Investments are not made in a single month, nor typically in two or even three months, but after many months of collaborative due diligence and negotiation. Finding the right investors and getting funded is never a simple process. Angelsoft is here to make the process more liquid and as transparent as possible.
Thanks for recognizing that we must pay for the cost of our operation. We think 250 dollars is perfectly reasonable. For 250, you benefit from 4 years of effort in building software, cold calling angel groups and selling them to adopt our system, building trust in the industry, listening to their (often negative) feedback, and creating a tool that the majority of the angel investors in the world absolutely love to use. It wasn't easy for us to get where we are, and 250 is a small price to pay.
Ryan Pipkin
Senior Account Executive
Angelsoft
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I still said that this is the best community, that I have found, on the web.
With a better understanding the $250 is worth it. $250 for anything a month is expensive, but the value is what makes it worth it.
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As for it posting your application to the investor community of 14,000, based on all of the dozen of other websites I have seen. It is most definitely in an entrepreneur's best interest to do it.
About the starting up with $250,000 as me and other owners state. Some of us do not have family and friends with $250,000 to borrow. I am on $30K annual income with a $1200 mortgage and $1300 in daycare for my kids. I have withdrawn from my 401K, taken a loan and maxed out my credit cards and still only came to about $15,000.
It is very upseting with the more wealthy people saying we aren't ready for investing because we do not have cash on hand of over $250,000. Maybe for those who haven't put in a penny, but there are those who just don't have access to the capital.
I know you didn't necessary come out and say that, but I have notice that is a theme here .
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I do business development on the investor side as well, just like Ryan, but I'm based in San Francisco, so I focus on the west coast investors.
Keep the questions coming, and we'll do our best to clear up any confusion!
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Investors want to make sure your product is successful so they "will" get their return. You have to factor in advertising cost, working expenses, etc, etc. If you can do everything to be successful go with $65K, I say go for it. If not, calculate all your expense you need to be successful for 3-5 years and go big.
True, asking for $550,000 will be harder to get capital wise, but $65,000 is harder to get based on the above reason.
FYI, I have worked at a small business incubator and closely with many small business owners. One of the biggest reasons they fail is exposure. If no one knows about your product, no one can buy it. At a minimum, I would encourge you to factor in advertising. And you are looking at about $7500-$25K a year per publication for advertising, depending on how often they run.
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So, if activity slows during certain times for about 14 days+ perhaps a little time extension for the price would be enticing. Just a thought
I think the $250 is more than reasonable. The tools & connections provided here for entrepreneurs and the fact that the company really has sold itself to my local groups in Northern California to the point where they won't even accept applications from anywhere else, shows the commitment of the company to benefit both sides of this venture.
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Many companies have found that 30 days is sufficient to attract attention and get into further talks with investors. Other have extended their application for a number of months. Views and ratings on a deal are cumulative, so this tends to push their deal further up the page when Investors sort by Most Viewed or Highest Rated.
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That is a great product request and one we will look into. For now, the Investor Community is less than a year old. We don't know exactly when those down times will be. In the future we will have a much better sense of things and will be able to provide more feedback. Thank you for your support, I'm glad you found the tools useful!
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I have had 14 businesses over the past 30+ years.
Over the past 4 years I have also been an Angel Investor myself.
I now coach entreprenuers through this same process of presenting themselves properly to potential investors. I love the process. It is a challenge and can also be a lot of fun.
Here is a secret.
It is all in the presentation. Do it right and you have a chance. Without that you have very little chance of success, period. Just keeping it real here.
What the team at Angelsoft has put together is an incredible bargain from my perspective and experience. After reading all of the comments above I think many are missing the true value of this service.
The true value is what you will learn about yourself and your business or idea by going through the process of applying for funding. When you go through this process and apply for funding through Angelsoft or another resource, you will discover valuable information guaranteed. In fact it may force you to realize that you are not ready or not willing to do what it takes or that your idea really is not as "special" as you think it is. That may sound a little harsh but it is the reality.
If that is what you find out, so be it. Better to find out in 30 days than in 3 years.
Much better to find that out for $250 instead of $250,000.
Think about it for a moment. If $250 is too much for you to invest in this process than why do you believe an investor would want to invest 100 or 1,000 times that in you?
Here is another secret for you.
As an investor the most important factor in my investment decision is the people involved and not the idea or the business itself. Some times I find a great "person" but the business is not a good for whatever reason. That may lead to something completely different than what you ever imagined. And it may have nothing to do with your current business or idea. It may lead to the investor saying I will give you as much as you want for a whole other business or idea. You have the ask yourself, are you someone that you would invest $500,000 in? Not your idea or your business, you personally.
That is the question the investor is asking themselves about you. If you can't answer absoulutely YES, than you NEED to invest what ever it takes as fast as you can to get that answer. If you can't convince yourself there is no way you will convince the person with the check book either. I believe when you go through the process you will have the answer and you will be better prepared to present yourself to an investor regardless.
Now lets get real.
Since you know in advance that only 1-2% of the applications get funding, what are you going to do to stand out and present yourself properly? If you do not get funding it will probably not be because your business idea wasn't good enough. A truly unique and or profitable business, service or idea will get funded. That is 1%. If you are absolutely convinced yourself, you now have a shot at the other 1% because you will not stop until you get the funding you need if you truly have what it takes.
The reality is there are a lot of great businesses that fail and products that never see the light of day because of the people involved. If you do not get the funding you are looking for it will be all about you. Ouch.
I want to encourage you to take responsibility for that and invest in yourself. Continue the process of becoming the "person" that you want to become. Give yourself every opportunity to learn and grow.
I hope this was helpful to someone here.
Feel free to respond or if you'd like to talk more offline just let me know.
Gene
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You are right - it's not abou the 250.-. The application process is helpful. I doubt it will give me more insight about myself though. Can you give us a more detailed insight how the world looks like on the other side of the fence? Which other services do you use and why do you use Anglesoft?
So far I subscribed to two services and all I got back was crap - serious. And this is not because my business idea is not interesting enough. I don't think that Investors really use services like Angelsoft. They are lurking around the local University or talk to their privat network. It must be hard for an investor to find the right business to invest and it must be utterly frustrating for investors to screen through the rubbish that is out there and find something with real potential. Do I hit the nail on the head, what do you think?
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But if you go through the discussion you will notice that the only people saying "that if you can't afford the $250 you are not ready" are the people that can afford it. Most people good or bad, do not have the $250 a month to pay. That to them is a light bill, day care payment for "1 week", or other necessay payment.
I am not say that Angelsoft is not a usful tool. If I had to vote I would vote it as the most usful to any other website or tool I have seen.
I would recommend the $250 here before anywhere else, but honestly, I do not think that 30 days is enough time to have investors look over, review with collegues and submit a serious inquiry about your business.
My apps I have submitted took about 3 weeks to hear a no with investors looking at it about once a week.
Maybe 3 months. And that is the problem! The $750 total.!!
Disclaimer: That is completing my opinion.
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My full time job the past two years hear at Angelsoft has been selling the deal flow platform to VCs and angel investors, and I was sent out to launch our west coast presence in San Francisco, because there are so many investors out here.
When you have to manage 100s incoming deals via email or personal contacts, and thousands of due diligence documents and discussions, it can be a HUGE pain. Not having a process is part of the reason that so many investors have to completely close themselves off to the outside world, or they'll be crushed by the dealflow!
Angelsoft is the only piece of software out there built exclusively to help them solve this problem, so its something that many investors rely on every day to manage the deals they are reviewing. You can see stats on this investor activity here: http://angelsoft.net/industry/index.seam
To get a sneak peak at what they see, you can check out these tutorial videos I just posted to help new investors get up to speed faster:
http://angelsoft.net/blog/2009/01/14/group-admi...
http://angelsoft.net/blog/2009/01/09/individual...
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Have you at Angelsoft thought about providing a discount for purchasing multiple months? If you left a monthly subscription at $250, but 3 months at $600, that is only a 20% discount. True, 20% seems high, but it is only 5% higher than 15% (average discount) and the thought of receiving the third month for only $50.00 seems really appealing.
In my opinion (and only my opinion) 3 months is ample enough time to find an investor through the site. If anything, it is enough time for them to review you project, contact the entrepreneur, and to exchange contact information.
As for the investors, I agree with bill. This is a service that they are using to produce “Income for them”. I think there should be a service charge. Simple put, charge the people who can afford.
Again,
Disclaimer: This is just my opinion. All advice may be flawed
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Watch for >>> WIDCASTER.net <<< this week, or reach me once I'm registerd at mcj1969@hotmail.com.
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I find your fee offensive, especially in these times. My partner and I have already spent over 500K on our business. The sad part is that some of that money has been wasted on black-hole financial groups like yours. They all had fees anywhere from $500 to thousands of dollars and just like AngelSoft, they called them filters or Good-faith fees.
Well after Madoff, Stanford, the entire mortgage industry taking us all for a ride, one would think that AngelSoft and Angel Investors would finally get it. But I guess not. It makes very little sense for you to be charging the people at the bottom of this food chain for "empty fees".
The real problem is that all of these groups, including Angelsoft, don't make any commitments as a quid pro quo for the fee. You don't promise anything other than posting my business plan in a database - WOW. How about a commitment for three genuine reviews of my plan by Investors typically interested in my industry along with one "face-to-face" meeting.
If you want us to "put skin in the game" and separate the men from the boys - how about you doing the same?
Mike Hahl
President
Ready For Golf, Inc.
772-215-3426
mhahl@RU-ReadyForGolf.com
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For example, I'm considering this, but I think we'll need to have a $500-$1000 budget to get our plan posted long enough to develop a reasonable investor pipeline on which to judge this feature of your site. But I think if you showed that e.g. 50% of the companies raised 50% of their funding from this investment, more people might be willing to advertise their deal on your site.
Also, a cash back promise or payment for number of investor deals could work. For example, for every investor that views my deal and provides feedback, I'd pay e.g. $10-25. I'm guessing this is where you make most of your money, but if your system is as powerful as you say, a model where you're more aligned with bringing together investors with entrepreneurs would create more value for everyone.