Keiretsu Forum To Drop Fees For Early-Stage Startups

http://www.pehub.com/53299/keiretsu-forum-to-drop-fees-for-early-stage-startups/

by jasonlbaptiste • 17 years ago

19 24 17 years ago

jacquesm6• 17 years ago

By now they might as well change their name, they've had so much bad press that if you google keiretsu forum you get this on page 1 now:

http://calacanis.com/2009/10/05/jason-jihad-keiretsu-forum-m...

And that link is rising rapidly. If Jason Calacanis keeps this up he'll be running them out of town yet. Pretty amazing really, considering the relative sizes of the parties.

netsp6• 17 years ago

Reputation is a lot harder to build then it is to kill.

jacquesm6• 17 years ago

Especially when the other party helps you.

fnid• 17 years ago

I googled it and i didn't see calacanis's post anywhere in the first ten on any major search engine.

paulbaumgart2• 17 years ago

I've noticed recently that Google re-orders results for different people. Not sure if it's Google account, cookie, or IP-address-based (I'm guessing the first two).

In my case, I see Calacanis's post at #10.

jacquesm6• 17 years ago

here is what I get:

http://ww.com/calacanis.png

lupin_sansei3• 17 years ago

I'll get voted down on this for sure, but I can't see the problem.

Nobody is making startups apply Keiretsu, and if Y-Combinator and Jason won't invest in your startup what's wrong with deciding to pay to let Keiretsu consider funding you? Better a startup pays some money and has a least one company consider their application than nobody does.

netsp6• 17 years ago

The problem is that it creates a problematic incentive structure.

lupin_sansei3• 17 years ago

You mean Keiretsu has an incentive to listen to many applications but to maybe fund few? Startups also have an incentive to only apply to places that they think they have a chance at getting funding from (especially if they have to pay). If Keiretsu don't fund very many startups word will get out and startups will stop applying.

jacquesm6• 17 years ago

It's ok if you can't see the problem, really.

There are plenty of people that play the lottery, and there are plenty of people that don't. Some see trouble and loss where others see a chance.

So, feel free to approach Keiretsu with your idea now, since they've stopped charging, you really can't lose.

Or do you think that maybe since they did this in the past they might have a little ethical problem somewhere ?

If Jason Calacanis fails with 37 Signals and all he does is keep the VC world on their toes he's got my vote.

It's like banking, if banks started charging you a $500 application fee for a $10000 loan, how would you feel ? What if they charged you the fee anyway even if they declined you ?

Why would they ever grant a loan then, after all there is more profit in getting people to apply endlessly and every now and the at random approve a loan to keep them hopeful.

lupin_sansei3• 17 years ago

"Why would they ever grant a loan then, after all there is more profit in getting people to apply endlessly and every now and the at random approve a loan to keep them hopeful."

Because once people realised that no more loans were being given out they would stop applying to banks that didn't give out loans. The same thing will happen to Keiretsu if they never funded anyone.

kgrin• 17 years ago

Wrong Jason... Calacanis is Mahalo & others... 37signals is Jason Fried. (Minor, of course, though I suppose not to the Jasons!)

gbookman• 17 years ago

The reason they're dropping the fee so quickly is because they don't fund or even listen to many early-stage startups.

I know lots of people who've applied to Keiretsu in Seattle. You have to really know your stuff and have significant traction for them to even consider funding you.

skmurphy• 17 years ago

Bob Crimmins left some very insightful comments on a Keiretsu Forum member's website at http://startuptrek.net/sequoia-backed-blogger-jason-calacani...

Here are some key quotes but the whole set of his comments are worth reading.

"While I don’t fully understand the inner workings of Keiretsu, what I think I have learned thus far is 40%- 50% (huge numbers) of the startups that pay significant fees to Keiretsu get no funding."

"In fact, I believe that Keiretsu’s incentives would be more properly aligned if they did have a stake in the outcome of the startups they represent. As it is, they have no incentive to ensure that every startup they put in front of their cadre of investors has a better chance than a coin flip of getting funded. [..] For example, Keiretsu could only take fees from startups who actually get funding, i.e., a success fee."

"I would support a pay for performance model where the angel aggregator group only gets paid if they are successful in making a good match between their investors and the companies they charge fees to--no funding, no fees. Charging, say, a 2% - 4% success fee is utterly reasonable and in this scenario, the angel group has it’s incentives aligned with the startups and the investors, i.e., to make successful matches between entrepreneurs and investors."

anamax• 17 years ago

I keep hearing about Keiretsu's process, but I've yet to hear anything about its results.

What kind of biz do they actually fund, how much do they actually invest, and what happens to the folks that they have funded (or even advised) in the past?

mhansen• 17 years ago

> Williams said the change is not a response to the recent

> attacks on the fees launched by investor Jason Calacanis

Sure!

jolie• 17 years ago

About damn time. I wrote a post about these guys and their ilk on ReadWriteWeb a couple weeks ago, and I really can't condone their practice of charging startups to pitch, ESPECIALLY for very early-stage companies.

Keiretsu Forum To Drop Fees For Early-Stage Startups

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