NB —This article is a followup to a tweet I made about sponsors pulling out of Pitch@Palace here.
Back in 2014 I was invited by the Duke of York to attend a drinks and networking reception around Christmas at Buckingham Palace for the founding of the Digital5. To this day I have no idea why other than I founded a few digital companies. It was completely out of the blue. Regardless of which I accepted (why not?!) and had a fantastic time meeting very senior members of foreign governments who seemed just as bemused as I was, and taking selfies surreptitiously of the decorations (we were clearly told no photos so sorry Andy). The staff at the palace were unexpectedly lovely and if you ever have the chance I thoroughly recommend a visit. It was great fun.
Subsequently, I was invited to pitch at one of Prince Andrew’s Pitch@Palace events. The organisers said I had to fill out an application, which was online (at the time of writing it was still available here). I’ve done literally hundreds of these types of things, so I have a routine for qualifying them out which largely involves checking if I’m available.
I joke, but you can probably tell from my avatar that I have some grey hairs. I know there a few shysters around, increasingly skimming less experienced founders in the tech startup industry. One of the signals for these types of people is if they’re asking for money to pitch to investors. It’s a massive red card. Investors want to know about you so will happily pick up the phone. Other founders will happily tell you about the investors they know, as will Venture Capitalists. Most incubators and venture studios have investor contact lists they willingly share. There is literally no reason to pay to pitch to investors, it’s simply predatory on the part of the organisers and anyone operating in this way should be named and shamed for it. As a tech founder, time is your biggest asset and people who charge for access are simply wasting that and your hard-earned cash.
So I was very surprised when reading through the lengthy terms from Pitch@Palace that Prince Andrew was asking for equity to pitch. Bear in mind that this was an enterprise funded by big business sponsors like AON, Standard Chartered and KPMG to the tune of hundreds of thousands of pounds. They clearly didn’t need the cash. Somewhat cleverly he wasn’t asking for money upfront, that would be too gauche I guess. Buried in the contract you can see Pitch@Palace was taking 2% of businesses for zero cash if you raised investment at any point for up to three years after the pitch event. This is absurd beyond belief. An early-stage tech startup can easily justify a £500k valuation if they have some people and a bit of tech, so that’s like giving away £10k before you’ve even started. And £10k for a few investor introductions is scandalous. And that’s just a start. If your valuation goes up, and surprise surprise they all do, you’ll be giving away even more. Worse still, if you raise another round in the three years, you’re tied into the Prince.
What’s even more scandalous is that the people involved didn’t even know about it. By burying the equity terms at the end of the contract it has been missed, even by other founders. I don’t know anyone who was told about it upfront. Since tweeting about it, I’ve even been contacted by investors and journalists who attended pitch events that weren’t informed what was going on.
The message to other founders is simple — don’t give away cash or equity for investor introductions. For Prince Andrew, his actions are once again inexcusable and as we know there are many unanswered questions, but in this particular case what on earth is a member of the royal family using his status to take equity from early-stage tech founders for essentially nothing? I’m out.