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It’s time to abolish VC beauty contests

A friend of mine pointed out the Canadian Innovation Exchange event happening in Toronto to myself and another entrepreneur and suggested we might consider attending.  There are some really good looking sessions there from some good VCs who are no doubt looking to increase deal flow a little.  For companies that are selected to present, you also get a 10 minute pitch and a 3 minute one on one meeting with each of the investors afterward.  

What's not to like, right? 

A lot.  The model for this conference is that the VC community builds deal flow by holding a beauty contest and charging entrepreneurs to pitch.   It's a dutch date with a miser, which is a bad basis for a relationship.  

To my friends in the Canadian VC community, for whom this conference and others like it have been a fixture for many years, I say this: In any other business, prospecting isn't a profit center. The model wherein aspiring entrepreneurs pay for the right to talk with you is one you probably ought to consign to the trash heap of history as you think about reforming your business.  And yeah, I know you've dropped the price to $495 for "early bird" registrants this year, but why not just abolish the practice altogether?  

To aspiring entrepreneurs who want to talk with any of these investors: pick up the phone and call them. Investors will take your call without asking you to pay for the privilege.  If your idea is any good, you'll get a meeting. The same 10 minute pitch you were going to give on stage at the CIX can be delivered in person, and the bonus is that you'll get more than 3 minutes of feedback.  

{ 5 comments… add one }

  • Jesse Hirsh March 25, 2008, 11:01 am

    Well said! Community is great and all, but sometimes people get a little complacent and neglect the good ole gumption and hustle of making your own contacts and pitches…

  • Shai Berger March 25, 2008, 3:55 pm

    I second the motion.

    Especially given the small size of the Canadian VC community.

    But there are beauty contests that work quite well, e.g. DEMO.

  • Been there March 26, 2008, 7:37 am

    Good points Alec.

    Paying to get facetime with VCs are for suckers.

    Unless its DEMO, but even then its starting to seem silly given the amount of traction that its rival TC40 has gotten — and does not charge for its exposure to the startup.

    If you can't get a meeting based on the merit of your venture, or your ability find a way to connect to the right people though "hustle of making your own contacts and pitches…" then you/your team are probably not well suited for the startup game.

    Another draw back about this is that you're likely to be presenting to a reasonably large audience, an audience which may have prospect and current competitors. If you're pitching to a small group or a partner inside a board room, you're probably a bit more likely to open up some more sensitive information than a roomful of strangers. Once again another disincentive for the startup, and a dilutive effect in the likelihood that an investor will find quality information or opportunities.

    The only way I see how this type of setup can work well is (1) its well attended by media; (2) its free to selected/qualified startups, with a deal savvy selection committee; (3) the investors pay foot the bill for costs of the event as a way to gain more exposure and dealflow within the community & media

  • Dave Forde April 2, 2008, 7:37 am

    Great post! It does seem a little backwards that the one with the gold has to pay to share their idea.
    As someone who presented and won at Demo, do you still see value in that model Alec?

  • Jerry King April 2, 2008, 4:20 pm

    Alec, total respect for you and what you’ve accomplished at Iotum. I empathize with the sentiments behind this post and ensuing comments. I sense the irritation. However, I believe the argument should be made with a bit more nuance.

    “Free” in effect says to the organizers of the Canadian Innovation Exchange (CIX) that there is no perceived value whatsoever being created by the present level of effort(s). The event’s orchestration—the mutual convenience of face-2-face synchronizing of users and suppliers of equity capital in one place at the same time, the curating of entrepreneurs and VCs (by stage of lifecycle, or industry focus, or references), the opportunity for informed price discovery, the opportunity to simulate an auction-like environment and obtain the best price, the opportunity to collect useful market intelligence/scuttlebutt based on everyone being present at the same time. All of this is for nought? Nada, zilch, zip, not worth the paper it is written on?

    One might argue that there is insufficient value being delivered at $495 and seek a different figure. Or, that the Web disintermediates certain middle-man that CIX used to do so well and that for $495, one needs to see more value added to the existing package. That’s fine. But to say that it should be free strikes me as unfair and unreasonable.

    I hold no investment in, nor do I have a business relationship with, any of the organizers of the CIE.

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