I would like to comment here from the perspective of a MEMBER of the Keiretsu Forum. I am not "with" the Keiretsu Forum (the Company) and do not represent their views.
What is astonishing here to me, is that Jason has launched this campaign "to destroy" all these Angel organizations without doing any homework to determine the facts of the situation, with regards to how this side of the private equity market works. OF COURSE it would be ridiculous for a wealthy Angel to charge an entrepreneur just for a few minutes (or even for a few hours, or days) of his/her time. But that is NOT what is going on here!
Jason characterizes (wrongly) we Keiretsu Forum members as "fat cats", scamsters (and with various vulgarities), out to "rip off" poor, struggling, nearly-broke young entrepreneurs by taking their money for a few minutes of our time. All of this is untrue. First of all, we look 95% at going businesses, and are more likely to compete with the local Bank, than with venture capitalists. We don't really have much of an appetite for "concept stage" deals. Secondly, an accredited investor is not necessarily a "fat cat" the criteria is $1M net worth OR $200K tax return Gross income for the past two years; not exactly "fat cat" by 2009 standards. Jason, if you want to see a "Fat Cat", look in the mirror! Finally, we are very passionate about helping entrepreneurs (of all ages), and we are most certainly not "a Scam" or "a bunch of D.Bags"; QUITE THE CONTRARY in my experience.
The Keiretsu Forum is a large-scale, global service organization with 49 full-time employees to pay. Members not only pay the vast majority of the operating costs, they donate (on the average) a fourth to a third of their time to helping the entrepreneurs that come through. The Keiretsu Forum itself is a business which does not share in any "upside" from the startups that come through, as it takes no equity and none of the investment capital flows through the Keiretsu Forum. It is just a professional service organization.
The Keiretsu Forum holds over 50 brick-and-mortar meetings a month, along with hundreds of diligence teleconferences, events, training sessions, and meetings that support entrepreneurs. Over 200 startups have been invested in with over $200M since Keiretsu was launched back in Sept. 2000 (and 110+ Charities to boot).
The Keiretsu very much resembles, in it's investment profile, a $250M seed venture capital fund. To conduct professional-level deal screening, presentations worldwide, and extensive due diligence processes on hundreds of companies worldwide, and service the equivalent of 850 actively-involved LP's, requires an operating budget. In the venture capital world, 2% management annually provides a $5M operating budget for comparable activites. In the case of the Keiretsu, it is done on a relative shoestring because the donation of members' time creates the equivalent of about $6M annual diligence budget (by my own estimation). But the employees salaries, insurance, and the myriad of other expenses must still be paid. In the venture capital world, this cost is born entirely by the LP's. In the Keiretsu Forum, 90+% of it is born by the Angels who utilize the Keiretsu's services, as members.
Jason makes the charge that we Keiretsu members are "putting the poor entrepreneurs money in our pockets", positioning himself as the modern-day Robin Hood for entrepreneurs. But that is not a fact; zero money comes to the Angels. Instead, we PAY to be members. He seems to be operating under the delusion that everything is free, or should be free. The world actually doesn't work that way.
Very few companies presenting at the Keiretsu are "concept stage"; most are companies with operating records and cash flow, able to pay small fees. Of the 50 to 100 who apply to the Bay Area chapters monthly, only 3 to 5 of them end up paying a fee - those that actually present. And of those that present, historically, they have a 55 to 60% chance of being funded.
Jason has framed the discussion in a way that is nonsensical. A sporting equivalent would be "We will KILL OFF everyone who is promoting Babe Ruth's heritage as a great Football player! Go Footballers!!". He simply knows very little about the private equity space. I am going to publish a series of educational videos to educate him about the basics.
There are many other things that Jason "Crass-a-Canis" (an apt name that a commenter on my blog assigned - look up the definition of CRASS) is doing that are flat out untrue, slanderous, and completely WRONG. He also has taken an EXTREMELY nasty tone, calling us 850 Keiretsu Members various terms including "D.Bags" on Leo Laporte's show. He invited me onto his TV show, then reneged, switching me to Skype video. Then he cut off my sound and made a ceremony of kicking me off. He's declined several cordial invitations I extended to attend the Keiretsu Forum, instead ridiculing the invitations. And clearly, he does not WANT to learn anything about the facts of the situation.
I am reviewing all of the video of Jason, the people he's had on his TWIST show, on Leo Laporte's show, and will be issuing a video rebuttal to each and every point he's making. He simply has NOT DONE HIS HOMEWORK, and is dead-wrong on this one. I will pay special attention to his guest "Mr. Pink" and the ex-Keiretsu employee, focusing on the facts of every detail.
Sincerely,
-steve bell | founder & ceo | StartupTrek.net | (310) 922-5574 cell# | steve@StartupTrek.net
http://StartupTrek.net/about/
Guest Lecturer, Entrepreneurship & Innovation, Orfalea School of Business, Cal Poly University, San Luis Obispo, CA
Member, Keiretsu Forum, Silicon Valley Chapter
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After tech heavy hitters like Jason Calacanis, Robert Scoble and Fred Wilson expressed public outrage over its pay-to-play fees, the Keiretsu Forum has begun waiving fees for early-stage startup presentations. According to PeHUB's Deborah Gage, the network is asking its chapters to disregard presentation charges for companies with less than $500,000 in capital and for those trying to raise less than $500,000 from investors. ]]>
In early October ReadWriteWeb covered the uproar Jason Calacanis caused when he spoke out against pay-to-pitch VC presentations. Said Calacanis, "It's low-class, inappropriate and predatory for a rich person to ask an entrepreneur to PAY THEM for 15 minutes of their time."