Mexican-American investor Lolita Taub probably didn’t expect to find herself at the center of a controversy when she agreed to participate in a discussion on how to help Latino startup founders get more VC money. But once she mentioned during the Feb. 3 Twitter Spaces chat that she was taking payments in exchange for critiquing founders’ pitch decks, that’s exactly where she ended up.

Pitch decks lay out the business case for a start-up, and are the lifeblood for any founder hoping to raise cash. The prospect of a VC engaging in what looked to some like a pay-to-play scheme quickly drew wide and severe reactions

But as the days went by, the discussion broadened as members of the startup community started to ask not just is it ever ethical to review decks for money, but also is it ethical that minority founders routinely get less money and fewer opportunities than white counterparts and how can access be increased for those without existing networks. 

There was little debate about one point: the underrepresentation of minority entrepreneurs remains a major problem in the start-up world. Black-owned businesses start with nearly three times less capital than white-owned firms, according to a government report from 2020. That report also shows another dismal picture in terms of founder diversity, pointing out that only two percent of founders are Latino. On the investment side, the picture is similarly bleak: only 5.3 percent of angel investors are minorities.

It’s a problem that Taub seeks to help remedy as part of her professional mission (and often speaks of publicly without incident). What raised people’s hackles this time was that in addition to her work as a scout for Lightspeed Venture Partners, she also runs a consulting business called LaaS, or Lolita-as-a-Service. It was as part of this business that she charged for reviewing pitch decks, and provided other services ranging from general-purpose business advising to making introductions between entrepreneurs and other relevant investors.   

For some, the issue was clear-cut: under no circumstances should any founder pay a potential investor to read a pitch deck or to make introductions. 

“Assuming it is possible to eliminate potential for bias (hard) I still think then the VC is leveraging their employer and the LPs money in a way that is inappropriate. Like a Goldman hiring manager reviewing finance resumes for money or a dean of admissions reviewing applications,” one startup founder said on Twitter.

Nick Caldwell, Twitter’s general manager of core technology, put it more succinctly:

“Charging founders to review pitch decks/take a meeting/get an intro is a grift, surprised to see the debate,” he tweeted.

Some of the reactions seemed to stem from the fact that many were incorrectly assuming that Taub was charging founders to pitch her for investments, an issue she tried to clear up with a tweet that said: “[face-palm emoji.] In case there's any doubt: I have never and would never charge a founder to pitch me for investment consideration.” Though for some even this could be laden with the potential for conflicts.

Meanwhile, others stepped into the fray to defend the practice, explaining why the service could be valuable to founders – and why it could help increase diversity among VCs.

Charlie O’Donnell, the sole partner and founder of Brooklyn Bridge Ventures, launched a lengthy thread explaining the value behind LaaS-type operations.

“First off, historically, nearly everyone in VC was an already wealthy rich white dude and so were the angels – so when we're discussing which direction money should be flowing and who should be giving their time freely, keep that in mind,” he said.

This comment speaks directly to issues Taub has tried to address in her career and to the purpose of the original Twitter Space: the absence of access for minority founders. For an entrepreneur with no network, paying for the right to get some initial introductions certainly could be a worthwhile investment. In the thread, O’Donnell stated that he has taken money to do pitch deck reviews before, and he reflected on the kind of founders who took up these offers. 

“Founders were often from underrepresented groups who were super early. I asked one why this might be and he said he liked clarity. He didn't have a network and didn't want to waste time getting turned down,” O’Donnell said. “Plus, he had been to too many ‘charity’ meetings where he wasn't taken seriously and he felt like investors were checking a box. In this way, he was buying my time and he didn't have to deal with feeling like he didn't belong there. He said it gave him power in our dynamic.”

It’s also no secret that putting together an effective pitch deck is difficult. Conveying the necessary information accurately, coherently and engagingly is something that founders need help getting right. The challenge is finding people who are either generous enough, or not-conflicted enough, to give specialized, professional-caliber advice regularly – and that’s where people like Taub and O’Donnell see these review services fitting in.

“I think if you could get someone who sees a ton of decks to check yours out for $250, it has a good chance to be the best $250 you ever spent in your fundraising process,” O’Donnell tweeted.

Ultimately, O’Donnell proposes his idea of an “easy fix” to the problem, saying that VCs can offer deck review as long as it is very clear they won’t fund clients. This lets founders be the ones to decide whether they will get more value from pitching the VC or engaging them as a consultant. 

Taub, for her part, took both the criticisms and the suggestions to heart. She announced on Twitter Thursday that she had made changes to her offerings and workflow to address any perceived conflicts between her paid and free offerings and her investment work. Among the changes, Taub said she had “nixed paid pitch deck reviews” but would continue to offer other consulting services while making it “abundantly clear that those who hire me will be ineligible for investment.”  

In the end she said she agreed with O’Donnell that “we need to consider new norms if we're ever going to have non-rich diverse emerging fund managers.”

In a tweet thread posted Sunday, Edward Gonzales, founder of rent protection insurtech Paypadz, said he had brought up Taub during the Twitter Spaces last week with the intention of showing gratitude for her work, but his comments inadvertently started the firestorm.

"I became sick to my stomach when I realized a lot of the recent negative press about @lolitataub stemmed from my own words being twisted by toxic community members & the media," he tweeted. "I regret this situation and just wanted to clarify that I intended to PRAISE and truly give @lolitataub thanks for fighting for our community. Even when faced with scrutiny she is selfless."

Note: This story has been updated to include comments from Paypadz founder Edward Gonzales, who tweeted comments about the story after it was initially published on Feb. 11.

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