Revolutionary Angels' new business plan competition: $250K prize, $5K entry fee

http://www.xconomy.com/boston/2009/10/05/revolutionary-angels-launches-pay-to-play-business-plan-competition/

by waderoush • 17 years ago

19 19 17 years ago

htsh• 17 years ago

This sounds a bit shady to me. They get 100 startups to pay 5k each, then they choose 2 of those startups to fund 250k and 50k, with 200k going to cover their costs? In the end, you have 98 unhappy startups paying for 2 startups to launch and to pay these people.

YCW10• 17 years ago

It is a free country, but this is a gross idea. Thankfully it seems not to be attracting any entrants. MIT's 100K competition gives almost the same cash outlay for no equity and MUCH better connections and support. According to his model he gets 10% AND $800K in "management fees" if everything was to go as planned (100 entrants per quarter). I hope this is the last we hear of them.

edw519• 17 years ago

I never understood business plan competitions. What's next, project plan competitions? Data flow diagram competitions?

This is just a bad idea. The business plan is just one (small) piece of what it takes to compete. What really matters is the business itself, not the plan.

To me, this makes as much sense as cancelling the election and going with the polls, or cancelling the football game and going with the bookies' predictions.

tom• 17 years ago

Ok, I'm going to be unusually harsh for me, but here goes.

If this is really going to be quarterly, that's just shy of $800K in fees per year and 392 startups pre-paying for "services" and 10% (!!!) of your co. Yeah, no thanks.

Anyone in Boston is better off hitting the crowded myriad of events (Web Inno, Open Coffee, etc.) and spending the rest of their money on lottery tickets. At least with Web Inno and Open Coffee you can meet folks who actually matter in this scene, unlike their list of "advisers".

thingie• 17 years ago

It looks more like a lottery than a "business".

elblanco• 17 years ago

New business plan. Host forums for business plans, charge $5k entry fees. 12 people show up, rent is paid for a year. Host 3-4 a year, buy a yacht.

jacquesm• 17 years ago

Boycott these guys. Never ever apply to them, please.

It's a simple rip-off. No serious VC or angel would EVER charge you for pitching, if they're going to rip you off at the entrance you can be sure they'll be ripping you off at the exit too.

Until you have a deal, you pay your way, they pay theirs.

wheels• 17 years ago

Not to mention that taking particularly stupid sources of funding can give you a scarlet A if you wise-up further down the line and need to raise more money. It's a bad deal even if you "win".

ilamont• 17 years ago

Would many YC startups be willing to pony up $5k for something like this? Little chance of winning or getting much visibility. Seems like the $$$ could be better spent on development, hosting/colo costs, paying the rent, etc.

gojomo• 17 years ago

If this paid out more that the total in entry fees, with the sponsors making an additional contribution to the prize pool (which they internally justify as a publicity and lead-acquisition expense), then I could squint and strain to make a not-totally-laughable case for it.

Disregarding the time and distraction, this hypothetical alternate competition could have a slightly-positive expected return in cash for credible entrants. The feedback and publicity could be worth the trouble. And the whole process could be seen as a helpful winnowing process, siphoning money towards more-likely-to-succeed ventures.

But as structured, not only does Revolutionary Angels want their 40% overhead fee, but also equity in the winner. ("Here. let us buy some of your company with all of your entry fees.") That's double-dipping when even the 40% single-dip is excessive.

And gven how generous they've already been to themselves, I would be highly suspicious of the judging process as well -- they might triple-dip by awarding the prizes to cronies.

Alex3917• 17 years ago

Revolutionary Angels' new business plan: competition

Dilpil• 17 years ago

$50 is questionable, $5k is laughable.

cridal• 17 years ago

shmucks...

lukas• 17 years ago

"how long it can take for new entrepreneurs to win their first meeting with an angel or venture group" - has anyone had trouble getting meetings with angels or venture groups? In my experience this is the only easy part of running a startup.

acangiano• 17 years ago

You'd have to be very desperate and foolish to fall for this.

flooha• 17 years ago

The really odd thing is that they will find people willing to pay to be in this competition.

far33d• 17 years ago

Pay $5000 so you can fund someone else's startup!

A prerequisite of "angel investing" is that you actually invest. Here we have a group of "advisors" funneling other startups' money (not their own) to a company of their choosing, and taking any upside in their equity stake!

Sick. This makes Boston look pretty bad, and xconomy looks worse for even giving them publicity for this.

echair• 17 years ago

This is a well-established business model in poetry contests.

jasonlbaptiste• 17 years ago

If you're a startup wasting 5k on a business plan competition, you don't deserve $2.50 let alone $250,000. Some don't know any better though. These guys should be boycotted, blacklisted, and shamed from anything that is startup related. Stuff like this really ticks me off.

Revolutionary Angels' new business plan competition: $250K prize, $5K entry fee

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