The ability (and willingness) to pay to pitch to angel investors is a filter of a kind, but it's selecting for traits that you don't want in startup founders:
1) An inability to network and sell - if they can't get to see angel investors without ponying up cash, how on earth are they going to get customers?
2) A willingness to spend what is (at the time) a large portion of their capital on something that isn't necessary. By definition if you're looking for angel investment you aren't flush with cash and some of the amounts listed (up to 10K), are substantial amounts of money to waste.
3) An inability to understand the role of incentives in human behavior, specifically, if the angels they're pitching to are being paid then they're more likely to be interested in listening (and getting money for doing so) than actually investing.
Essentially these people are paying money to overcome their lack of entrepreneurial ability. Why any serious angel would view these as better candidates for investment is beyond me.
Because there are top-notch angels that get all the best deals with the best entrepreneurs. I guess there are plenty of other millionaires in the Valley looking for (reasonably) good investment in the tech field, but they can't write "Hackers and Painters", and they can't understand hackers that good because they made their fortune in a hedge fund. "Lack of entrepreneural ability" may actually turn to be a provincial naïvety (think of wannabe-entrepreneur from North Dakota who just came in Valley), and is not usually a sign of certain failure.
I mainly agree with the article and you. Yet, I cant help but think that the VC/angels market is NOT perfect, in a sense that not all the best project get financed by the best angels. So forum like these still need to exist. However, their business model must change.
I recently saw an angel investors club in Austin Tx give a talk. They require a fee of $500 to give a pitch, but the attitude of the angels was much more offensive to me than charging startups to pitch.
This is how they said it works: Every few months they hear 5-minute pitches from 40 or so companies, and narrow it down to 5 on a whim. Those 5 get to come back and give 1/2 hour pitches, and then they pick 1-2. They told us not to worry if we don't make the top 5 since they don't really think that hard about who should make the top 5 anyway.
What's funny is that their investment size is typically around $100k. If they make $500 each from 40 pitches, that's $20k, or 20% of their investment.
These guys were all the same kinds of guys who were bullies in high school, and this is just a way that they can keep bullying nerds. They're not really really trying to make tons of money off of these fees though. Keep in mind, in their world, everything costs a lot. It costs them $20k per year to join the country club, etc., so they just expect that people should always pay a lot of money to impress other people. Their angel investor club probably spends as much money on parties and other stupid shit as they do on actual investments.
Anyway, to me, the biggest turnoff was not the actual fee, but the whole process used by this particular angel organization.
If this is true, then you should really publicly out them. I don't get why on earth you would "protect the innocent". If we're all in this together, then we need to alert each other - as loudly as we can - when we see things that aren't right.
I'd ask what happens to the folks that they invest in and what kind of folks/biz they invest in.
If the answers to those questions don't match up with what you're interested in, why would you pitch them? Do you really think that you're going to be their first success and that they're going to change what they invest in for you?
1) An inability to network and sell - if they can't get to see angel investors without ponying up cash, how on earth are they going to get customers?
2) A willingness to spend what is (at the time) a large portion of their capital on something that isn't necessary. By definition if you're looking for angel investment you aren't flush with cash and some of the amounts listed (up to 10K), are substantial amounts of money to waste.
3) An inability to understand the role of incentives in human behavior, specifically, if the angels they're pitching to are being paid then they're more likely to be interested in listening (and getting money for doing so) than actually investing.
Essentially these people are paying money to overcome their lack of entrepreneurial ability. Why any serious angel would view these as better candidates for investment is beyond me.