Entrepreneurs often hope to catch the eye of Keiretsu Forum, one of the world’s largest networks of angel investors, so they can pitch their companies to roomfuls of investors.
But one L.A. tech leader has caught Keiretsu’s attention for a different reason: He’s vowed to destroy it.
The entrepreneur is Jason Calacanis, chief executive of Santa Monica-based Mahalo.com, and widely regarded as one of the most influential and outspoken figures in the local tech community. He despises Keiretsu’s “pay-to-pitch” policy.
In recent weeks, Calacanis has launched a campaign – he calls it “Jason’s Jihad” – against Keiretsu, urging people to boycott events put on by the organization, which is based in Lafayette in the Bay Area. Although his focus so far has been mainly on Keiretsu, more recently he’s attacked several other investment groups that operate with a similar business model, including two based in Los Angeles.
At least one Keiretsu member has threatened to sue Calacanis over his attacks. The organization claims it only charges companies that can afford its services and as such dismisses Calacanis’ criticism as ill-informed.
Calacanis is blasting Keiretsu because the organization uses a pay-to-pitch model. Traditionally, angel groups have functioned as non-profits that hear entrepreneurs’ pitches for free; angels covered the expenses themselves, through membership dues and sponsorships. But it’s becoming more common for investment organizations to make entrepreneurs pay to pitch.
Entrepreneurs who make 20-minute presentations at events organized by Keiretsu – Japanese for a tight-knit network of businesses – pay a fee as high as $1,500. Keiretsu executives said the fee helps cover the cost of putting on the meetings.
But Calacanis argues that charging entrepreneurs to pitch is an abuse of power. Wealthy angel investors, he said, shouldn’t take money from entrepreneurs who might be cutting back their own salaries to keep their companies afloat.
Slamming Keiretsu and similar organizations as “low-class, inappropriate and predatory,” he said such groups should pay their expenses like other non-profit angel groups – with sponsorships and member dues. After all, the entrepreneurs aren’t guaranteed that the angels will invest in their companies. And if they angels do invest, they stand to profit.
Calacanis hopes to destroy Keiretsu, or at least its pay-to-pitch practice, by convincing entrepreneurs to boycott it and similar organizations and groups. If he’s successful, he would blacken the eye of a system that’s been gaining in popularity.
Calacanis believes he has a duty to protect budding business people.
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