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Debating The Pay-To-Pitch Model

To further the debate about whether companies should pay to pitch, Entrevestor today is publishing guest columns outlining opposing views.

Since Toronto-based startup evangelist David Crow criticized the First Angel Network in Startup North on Feb. 19, members of the community have discussed publicly and privately the pros and cons of FAN’s model .

FAN has channeled more than $9 million into 22 companies (and counting) since 2005, during which time it has accepted $1.1 million in funding from the Atlantic Canada Opportunities Agency. It charges each company that pitches to its full membership $3,000. Usually 8 percent of the funds raised are paid to FAN Co-Founders Ross Finlay and Brian Lowe, who reinvest at least half of that money in the company being backed.

Today, Finlay and Lowe write about the work done by FAN and defend their financing model. And Toon Nagtegaal, a Co-Founder of NEXTPHASE, takes issue with entrepreneurs ever paying to pitch to investors. A native of the Netherlands, Nagtegaal was a Co-Founder of Atlas Venture and p3 technology partners, as well as managing director of Holland Venture and a VP Investments of GrowthWorks.

Both these pieces are constructive contributions to this important debate, and we invite our readers to join in with their comments. Many thanks to Brian, Ross and Toon for their contributions.