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The problem is that it creates a problematic incentive structure.

You mean Keiretsu has an incentive to listen to many applications but to maybe fund few? Startups also have an incentive to only apply to places that they think they have a chance at getting funding from (especially if they have to pay). If Keiretsu don't fund very many startups word will get out and startups will stop applying.

How would "word get out"? Vague insinuations?

I haven't seen them publish any hard statistics, so how can a group know if it's just them that got rejected for funding, or if it's pretty much everyone who applies?

Word is getting out. This forum, that blog. That is word getting out. I'm sure fewer startups are applying.

I mean Keiretsu has an incentive to listen to as many applications as possible. Your right about startups having incentives too. However, Keiretsu have all the information. hey have an incentive to keep it that way.

Investors, on the other hand, play the game more regularly. It's impossible to keep the information from them long term. If they had to pay to come, they would need to be finding good investments. Startups don't have this feedback, at least not without things like public complaints.

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