Angel Group Presentation Fees

Many angel investor groups charge entrepreneurs a fee to present to their members. I’ve questioned this practice a number of times and it never seems to add up to me. I applaud the handful of angel groups that do not charge entrepreneurs presentation fees. However, most groups do charge fees ranging from several hundred to several thousand dollars. In fact, I was recently told that the Keiretsu Forum has raised its presentation fee from $3K to $5K. How can entrepreneurs looking to raise capital afford to pay $5K for the mere chance of raising more money? The presentation fees just seem backwards to me.

Angel groups claim that the presentation fees are necessary to offset their own costs. However, many angel groups are actually sponsored by local law firms or other service providers. Furthermore, most angel groups have membership dues and it seems to me that the costs of organization should by borne the members. Lastly, it just doesn’t seem right that a group of relatively wealthy people are asking entrepreneurs to subsidize their activities.

Clearly the market for angel capital is supportive of these fees and I myself have paid to present to angel groups. Nonetheless, I believe this behavior is exploitive and I encourage entrepreneurs to at least negotiate the fees down, which is definitely very possible.