Should You Pay to Launch to a Crowd?
TechCrunch, the technology blog now owned by AOL, recently announced its 2012 New York Disrupt event, a high tech start-up extravaganza with advice from successful entrepreneurs and new companies battling for prizes and attention. Ticket sales have started—with rates that can run upwards of $3,000.
It's an example of a relatively new phenomenon among high tech startups: paying to be in showcases that are also contests. Winners might can get tens of thousands to hundreds of thousands of dollars in pledged investments or in outright cash grants. Whether run by TechCrunch/AOL, entrepreneur Jason Calacanis's LAUNCH Conference, or some other group, these high-profile events also promise potential connections—investors, other entrepreneurs, and resources like bankers and lawyers.
If you could be sure of success, an entry fee would be insignificant. Unfortunately, having winners at these events means losers, as well. At Launch 2012, there were 42 entrants, but 12 winners—and there were 200 entrants in the so-called demo pit paying a $500 facilities charge each "to cover each company's share of the Wi-Fi and electricity as well as to cover the table rental and space."
Between fees for entrants and observers and lots of advertising, you can bet that the for-profit enterprises that run the shows are making some significant money from their efforts. But is buying into the model really necessary for entrepreneurs? Maybe not. After all, most successful companies have managed to get off the ground and succeed without the business equivalent of debutante balls.
Plus, there are now showcase alternatives that might help in your quest to establish a business at a cheaper price. That lowers the risk of not becoming one of the annointed and still potentially gets you in touch with others in the business as well as investors, who are going to scout many places to find possibly overlooked investments.
The Kauffman Foundation, a non-profit focused on entrepreneurship and education runs Start-up Weekend, a series of events organized by local groups around the world to jumpstart businesses. For example, Atlanta Start-up Weekend happens April 20-22 with tickets for individuals running $89. There are similar events in such places as Austin; Orange County, Calif.; Stamford, Conn.—and Paris; Dakar, Senegar; and Adelaide, Australia over the next few weeks.
You can find events either sponsored or promoted by networking groups like Tech Cocktail, which has tips for tech entrepreneurs and local event information and news for a baker's dozen of cities. And the Kauffman Foundation, again, has events listings on its StartupDigest site.
Some areas have their own homegrown events. New York has had a monthly tech meet-up for years, as well as the new and free NY Tech Day. The Oklahoma Department of Commerce has an annual entrepreneurs' conference, a list of events for entrepreneurs, and even start-up investment funds.
In other words, don't get dazzled by the most highly publicized, and profit-seeking, events in the tech world. Do a Web search with terms that include your city or state and a relevant word such as "entrepreneur" or "start-up." You might be surprised by the wealth of available resources that don't require you to have already developed some wealth to participate.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.