charlatan

Excuse the self-indulgent pathos, but given that I’ve been a startup CEO for the past five years, working 80-hour+ weeks trying to get my startup off of the ground, I get miffed when I see modern-day confidence men scamming those trying to build the next great generation of companies.

I’m talking about youngStartup Ventures (YSV). Even its name is misleading. While its founders have co-opted the word “ventures” they don’t actually provide capital to entrepreneurs. Instead, their business model is premised on holding conferences, convincing first-time founders there will be a laundry list of tier-1 “visionary VCs,” and charging startup upstarts exorbitant fees to attend.

Or, as YSV’s website puts it:

Whether you are an investor or startup, youngStartup Ventures is your ideal partner. Through our unique business filtering process we provide investors with a first look at pre-screened high quality deal flow, analytical services as well as time saving mechanisms. New business ventures gain access to value added partners, capital, and exposure they would otherwise find challenging to tap.

To tap these “value added partners, capital, and exposure,” there’s a convenient tiered pricing plan, oh ye of little means. To be a “Top 50 Innovator” runs $1,585. To attend the conference costs $790 and there’s an early bird rate of $395.

When I first launched my company a gentleman from YSV, whose home office is in Staten Island, NY, contacted me before we raised a round of venture capital. He detailed its upcoming Venture Summit in Boston, how it matches “The hottest startups with visionary VCs,” and I came away from reading the email thinking that these guys shot lightning from their asses and drank unicorn tears.

That was the bait. Then came the switch.

When I responded like hundreds of other now-funded entrepreneurs have — “Sounds great, what are the next steps?” — I got the “you want to be a Top 50 innovator, right?” bit.

That meant if I wanted to pitch my company to investors, it would cost me money I didn’t have. At the time I couldn’t even afford lunch. I also got the feeling something wasn’t quite right. For one, I didn’t recognize a single VC that YSV listed (which I admit didn’t mean much since I knew few at the time).

Later, I stumbled on this 2010 exchange by the oft-times controversial Robin Hood of Startups, Jason Calacanis, who attacked Adam Negnewitzky, at the time a senior associate at youngStartups Ventures, for charging entrepreneurs $1,500 to pitch at a conference. Calacanis said, “Charging startups is a scam that preys upon entrepreneurs that are desperate to meet investors. Any VC or angel associated with this should be ashamed.” Then he couldn’t resist adding, “Please kill yourself.”

What’s more, if you google “youngStartups Ventures” and “scam” you’ll find a plethora of links to posts and tweets that lash out at the company.

Fast forwarding to the present, I’d estimate that three-quarters of the founders I’ve met in my travels as a CEO, angel investor, and advisor and mentor at TechStars and MassChallenge have been contacted by YSV’s merry band of highwaymen.

Recently, YSV kicked the hornet’s nest right before its upcoming annual Venture Summit in Boston. On Twitter, Scott Kirsner, a writer for the Boston Globe, pointed to a nasty email chain between Boston startup legend Abby Fichtner, better known as “The Hackerchick” and Hacker in residence at Harvard Innovation Lab, and Dan Rose, who works for youngStartup in business development. Rosen had blasted a message to Fichtner’s 3,000+ member lean startup group. He had some “choice” words for Fichtner when she demanded that he refrain from spamming the outfit.

She wrote: “Dan — It is not okay for you to take advantage of our meet up to spam our members. We do not want your discount, we do not want your event in Boston, and further, I’d like to ensure that each of our 3,419 members knows not to attend it so am including them here.”

To which Mr. Rosen responded (I’ve highlighted some of his more entertaining debate tactics):

Screen Shot 2013-11-03 at 11.40.03 PM

The Twitterverse was then afire with Kirsner, Fichtner and others from the Boston startup ecosystem chiming in, as well as Jason Calacanis. YSV’s own recently active twitter account is particularly entertaining. Perhaps sensing a public relations fiasco, YoungStartup hastily threw up a blog to defend itself, which has done little to staunch the anger directed its way. Its first entry: “Is Paying to Pitch Really a Scam (or are the folks complaining saying it is for ulterior motives)?

In the interest of fairness, I reached out to Joe Benjamin, founder and CEO of YSV, warning him that I was writing a “harsh” guest post for PandoDaily on the topic and invited him to offer his side.

I’m offering it here in an abridged form and running his entire response at the bottom:

Maybe you guys aren’t aware of how bad the situation is for startups both seeking seed stage and those seeking institutional rounds or again your story is really not about the startup.

There’s an entire industry filled with companies that produce conferences and offer startups exposure, etc.  If you discourage groups like us from producing programs you are actually damaging the ecosystem and doing startups a huge disservice. We need to be incentivized to produce programs and have a right to our model, which is completely legit. If someone isn’t interested they don’t need to buy. That’s the great thing about America and capitalism.

When you ask me why we charge startups the real question is why would you think we shouldn’t. I could hear the case being made against angels charging startups to present to their own networks, but for YSV (a third party to the deal) to work months on producing a venture conference where staff is busy day and night recruiting investors from across the country and globe, where we pay for the hotel, catering, staff, printing material and take on a huge risk, etc. why in the world would you suggest that we shouldn’t? Do you think we should offer our services for free?

Your suggestion that we have a scheme or scam is completely false. We’re super honest and offer a very valuable service. Your suggestion that these entrepreneurs need you to protect them because they’re unsophisticated is also troubling. On a personal note, I think it’s pure evil the way you guys lash out at people.

There you have it. Benjamin claims he’s providing a much-needed service and I — and many other entrepreneurs — believe you should never pay to pitch.

There are a lot of bad actors in the startup ecosystem, and in my opinion, youngStartup Ventures is one of them.

Complete statement from Joe Benjamin, CEO and founder of youngStartup Ventures. (Editor’s note: The statement has been cleaned up slightly for grammar and punctuation, and typos fixed):

That’s so sweet for you for letting me know. I think it’s a great idea and appreciate the great amount of visibility you’re offering us. 

In order to get you this ASAP, I’m just jotting down notes below and not organizing the content.

Please reach out to Doron Reuveni of uTest , a company based in MA and interview him for the story. His company presented at two of our summits: The first time at the New England Venture Summit and then at our New York Venture Summit. The fact that he saw value, as many companies do, to join us again for a second event I think speaks for itself. I’m not sure what meetings/leads he had from the NEVS as the companies don’t usually tell us but he did raise a large round of funding from the NYVS where he connected with a west coast VC, Scale Venture Partners.            

Then please reach to interview Sharon Weinbar from Scale Venture Partners.  She’s participated at a number of our summits and ask her for feedback.

You can also reach out to Dave Gwozdz, CEO, Mojiva, Inc. He raised both series A and Series B rounds directly from our summits. One of those investors is Bertelsmann Digital Media Investments. You can also reach out to his angel investor Miles Spencer, who has encouraged and paid for more than one of his companies to present by us and ask him why.

Maybe you guys aren’t aware of how bad the situation is for startups both seeking seed stage and those seeking institutional rounds or again your story is really not about the startup.

Are you aware that both angels and VCs reach out to nominate their companies wanting us to feature them and either pay the bill for the company or have the company pay?

There’s an entire industry filed with companies that produce conferences and offer startups exposure etc. If you discourage groups like us from producing programs you are actually damaging the ecosystem and doing startups a huge disservice. We need to be incentivized to produce programs and have a right to our model, which is completely legit. If someone isn’t interested they don’t need to buy. That’s the great thing about America and capitalism. 

The truth is it’s no different if companies hiring someone to focus on their fundraising in-house, only difference is, they likely don’t specialize in it and if they do their usually a banker.

When you ask me why we charge startups the real question is why would you think we shouldn’t. I could hear the case being made against angels charging startups to present to their own networks, but for YSV ( a third party to the deal) to work months on producing a venture conference where staff is busy day and night recruiting investors from across the country and globe, where we pay for the hotel, catering, staff, printing material and take on a huge risk, etc. why in the world would you suggest that we shouldn’t? Do you think we should offer our services for free? Do you?

Do you know what we offer our companies? What benefits they receive?

Are you aware that we offer multiple tickets, two-page profile, presenting and a coaching session, which is super valuable?

Your suggestion that we have a scheme or scam is completely false. We’re super honest and offer a very valuable service. 

Your suggestion that these entrepreneurs need you to protect them because they’re unsophisticated is also troubling. 

As for your feature of Jason Calacanis, I suggest you interview him as well and ask him whether he recalls charging startups $500 to have lunch with VCs during his days as founder and CEO of Silicon Alley Reporter (SAR). I’m not against it as again this is America but for him to complain is a little pathetic.

The fact is he charges companies to exhibit and attend and higher rates then we charge so it’s really sad. The truth is he doesn’t believe what we’re doing is wrong, but the fact that he’s making a lot of noise he hopes will get him brownie points and attempt to squash competition. After all, that’s what Techcrunch did to Demo. Meanwhile they too charge a few K.

As for you, I’d ask you to write your thoughts on the whole investment banking industry and explain if you’re fine with them charging companies for their service (very similar to ours with higher fees). Again, I’m not against it, but it would be great to know your stance given your background as a former investment banker who I assumed charged companies to help them raise funding.

I’d also think it would be worthwhile for you to write about Accelerators. After all, their model is really not much different than a conference. We both know they are joining the accelerators primarily for access to people and ultimately for funding (i.e. the Demo Day). They surely would not be giving up so much of their company for a few $K and advice. Therefore, the question that should be asked is why should they give up so much of their company.

If uTest would have joined an accelerator and met Scale they would have given away a far larger portion of their company then the $1,500 we charge.

So… let the startups make up their own mind without you guys feeding them nonsense.

Love to hear your thoughts and thanks again for the publicity.

On a personal note – I think it’s pure evil the way you guys lash out at people.

Joe Benjamin

[Photo via ognam on Flickr]