Why I Charge
Everything of value costs something.
Every so often, I get asked by potential members of my angel group why I charge member dues.
I’m often surprised by the question until I realize that most of them have little or no experience with angel groups and so I thought I would just write down a few of the reasons why I charge member dues to my angel group.
(Note — I focus on PropTech, but I think the logic applies to any similar group.)
Here a just a few reasons:
- I researched and it’s a best practice
When I was first thinking about an angel group, I did what any nerd would do . . . I researched. I found several groups that did angel investing and tried to use their lessons to decide what I liked and didn’t like. One of the most consistent, undeniable ones I found was that all of the best ones charged member dues.
Most were a couple thousand annually and that served a bunch of the purposes I’ll dig into below.
So I don’t want to pose this as if it was my unique, original idea. Almost every major angel group that is taken seriously charges member dues. Go check out the top, most-active angel groups you know and see if they charge.
2. Sunk Cost
It’s a simple truism about the human condition that we pay attention to the things we pay for. Many of my prospective members tell me how much they will be involved. How they will share data and help our portfolio of startups.
They are going to do all the things and give all the help. All I need to do is give them free membership and they’ll show me.
It never happens.
They miss calls. Don’t show up. Ignore my email. And so on.
We all get busy with work and family and our hobbies and forget to pay attention to that free thing we joined.
Oddly enough, the ones who pay seem to have extremely strong engagement and attendance. (gasp!)
If you are an Econ major and have heard of the Sunk Cost Fallacy, this should be completely unsurprising to you.
3. Quality isn’t Free
Are you familiar with the phrase, you get what you pay for?
Slack, Websites, Hosting, Marketing/Branding, and on and on. Nothing is free. All of this costs money. It costs money to run this the right way.
In a world of billions of dollars of seed funds, how likely is it that you’ll see market-leading deal flow and data from a free investment group?
4. It’s a great filter
In my world, at the intersection of CRE and Tech, I am surrounded by . . . let’s call them “heathy” egos. Plenty of people read their own press and beat their chest on their AUM/traction/track record/whatever.
“I’m a big deal in Proptech.”
It’s not that overt, but it’s there.
“Look at all the deals I’ve done and all the success I’ve had. I’m a big deal and have pedigree and shouldn’t have to pay.”
I have ZERO interest in working with those people.
There is a certain hunger and curiosity that goes with the best investors (or at least the ones that I prefer to work with). “I shouldn’t have to pay” is exactly the opposite of that and so charging a fee not only makes people pay attention to it, but also weeds out those “big deal” egos that I just don’t even want to engage with.
5. My Time has Value
This is not a charity.
I am not bored and looking for hobbies.
Investing is something I take very seriously (been a career for about 15 years now) and therefore I want to do exceptional work. If I am going to spend my time, network, resources, and thought life on making this look exceptional, I should be able to compensate myself for doing so.
I assume that when people think about it they are not seriously asking me to personally provide all the carry costs of the group, create all the content, organize all the events, source all the deals, run all the diligence, and manage all the deals for free. Right?
6. Equal Yoking
At this point, I have dozens of paying members who happily pay the monthly fee on Paypal (and can cancel it whenever they want). To bring in a new member for free just because they are so “special” would be a pretty big slap in the face to everyone else. I’m attempting to create intimacy and camaraderie in the group. Unequally yoked memberships would do the opposite of that.
So those are just a few of the reasons why I charge people for membership in my group. It’s possible I am wrong and missed something big. Perhaps I am out of touch with the reality of angel investing. But I doubt it.
Besides, no one is forced to join against their will.
My group is just for experts, enthusiasts, and people whose career is aligned with tech in real estate.
If that’s not you, no hard feelings. You aren’t wrong or evil.
And you are welcome to keep chasing syndications on AngelList. (Let me know how that works out for you financially . . .)
But in my group, we all pay, we all engage, and we all give it the weight it deserves.
If that’s not for you, no hard feelings.