An Update To My Investment Policy

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Before TechCrunch I was an occasional angel investor, going back to the mid 1990s. I’ve also made investments since TechCrunch, in companies like Dogster, DanceJam, Seesmic and Daylife. Some people have seen this as a conflict of interest, which it of course is. To counter that I’ve always disclosed investments, and try not to cover these startups myself. Occasionally when news is breaking quickly or for other reasons, I will write about the company, but with the appropriate disclosure.

In 2009 the accusations of conflicts of interest by our competitors became somewhat distracting, and for a couple of years I discontinued investing in startups completely.

That policy has now changed. Over the last several months I have begun investing actively again. We’ve noted these investments in Shawn Fanning’s new startup and in Kevin Rose’s new startup.

I have also become a limited partner in two venture funds, Benchmark Capital and SoftTech VC. I am considering investments in a few other venture funds and a couple of startups as well, but have nothing further to announce yet.

There’s a period of time with any investment when I know an investment is possible or likely but it can’t be announced yet. During that time I don’t write about the startup at all, because I can’t disclose the investment. When another writer wants to break a story we may have to hold that story, or it becomes a forcing function in announcing sooner. That’s what happened with Yo. MG had the story independently and wanted to run with it. I can’t reasonably ask him to hold the story (THAT would be a conflict of interest in itself), but he can’t publish it here without the disclosure that I’m investing. Which led to the interesting situation where I was the only investor who confirmed on the record.

When these investments are complete, in a few months, there’s a very good chance that I’ll be a direct or indirect investor in a lot of the new startups in Silicon Valley, and that will mean that there will be financial conflicts of interests in a lot of my stories. Either because I write about those companies, or write about a competitor, or don’t write about a competitor.

The easiest way for me to handle this is to be up front about all of these investments and disclose it in posts, which I’ve done and will continue to do.

I think that this will all be fine. I’ll still be very hard on companies I invest in when they deserve it (ask Seesmic founder Loic LeMeur about that sometime), and I will still be quick to high five a company that’s doing well even if I’m not an investor, or if I’m an investor in a competitor.

Other tech press will make hay out of this because they don’t like the fact that we are, simply, a lot better than them. That’s fine, but when you read their coverage remember that they’re our direct competitors, even though they won’t “disclose” that particular conflict of interest. Luckily they don’t get to make the rules we operate under. We do, and you, as readers, can choose to accept those rules and read, or not and leave.

Maybe now I can get into those Bin38 dinners. You’ll always be able to see my investments on my CrunchBase page as well.

Update: The Tech Press: Screw Them All

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