Reckoning Day For Venture Capitalists?

Some venture capitalists are known for making speedy decisions, communicating clearly, treating portfolio companies fairly, and guiding their startups to a win for all stakeholders.

Others, not so much. Some even lob the odd (friendly) jab or two at bloggers.

A new site called TheFunded hopes to even the odds a little by getting the information out about how VCs treat entrepreneurs. They have a good database of venture firms (6,559 contacts from 3,529 funds), and invite members to rate and review funds after dealing with them first hand.

Others can agree or disagree with these comments, and/or leave their own. The end result is a list of happy and horror stories, as well as an overall 1-5 rating for each fund, on five different categories.

There isn’t much feedback yet, as the site is still under the radar with just 39 members. An example of feedback – Menlo Ventures has an overall rating of 2.8/5. There are two comments, one positive and one negative (the positive comment came from someone who was turned down).

You have to apply to be a member, which allows you to leave your own reviews and ratings, and read much of the feedback (only some reviews are made public). In the future they will only allow people who’ve been invited by other members. They also go to some length to make you prove who you say you are. VCs are not allowed in as members, and applicants have to say what company they are with and point to a bio page about themselves.

While I think this is a great service, I have a couple of problems with TheFunded.

First, since most startups are turned down for funding, there will be a tendency for people to leave negative comments, and readers need to take that into account. How well a fund treats the many entrepreneurs they turn away, of course, matters too, and that feedback is valuable. I think a good addition to the feedback form is a simple box to check if you were funded or rejected to help give readers context. Also, the face that this is a bit of a private club, and non-anonymous, should help mitigate many of the issues we mentioned with another feedback site, Gorb.

A bigger problem I have with TheFunded is that they distribute contact information about VCs, including email addresses and telephone numbers. This brings back memories of the repugnant, privacy-destroying Jigsaw, and it should be removed or at least made available only to members.

In this funding environment, where money is flowing, good ideas often have a number of venture capitalists to choose from. For entrepreneurs, this can be one of many data sources in determining who to accept funding from.