TheFunded.com Lets You Research Venture Capital

TechCrunch today reported on a company called TheFunded, that lets entrepreneurs trade information on and rank Venture Capitalists. It also provides contact information for 1,000’s of VC’s.

Why This Worries Me

As a guy who used to work in Venture Capital, a site like TheFunded worries me. Generally speaking, Venture Capitalists go after good companies, and bad companies go after Venture Capitalists. The beauty of the internet is that if you run a terrific company, Venture Capital will eventually find you. All TheFunded insures is that more mediocre companies will have direct access to flood the inboxes of the top ranked VC’s.

And More Worries

Another concern is the possibility that only rejected entrepreneurs will have the time to contribute to TheFunded. I’m not sure why a Kevin Rose or a Chad Hurley would take the time to join the site and add their input. Furthermore, consider that there are at least ten times as many unsuccessful entrepreneurs as successful entrepreneurs – and that’s just the percentage that have been funded.

The Funded’s Odd Rankings

So how perceptive are TheFunded’s entrepreneur rankings? A quick glance at the site right now shows that Bessemer Venture Partners and Draper Fisher Jurvetson are currently the rop ranked VC’s according to the 35 entrepreneurs currently on the site. I find this a bit surprising. DFJ has a lot of egg on their face among entrepreneurs right now for funding the ethically questionable PayPerPost. PayPerPost lets advertisers pay bloggers to write positive product reviews without requiring any disclosure (for the indepth, listen to Michael Arrington debate DFJ Director Josh Stein on the ethics of PayPerPost). Meanwhile, Bessemer Venture Partners have famously passed on a host of successful startups such as Google, Apple, EBay, FedEx, Intel, Intuit, and PayPal, while greenlighting 172 companies most people haven’t heard of.

I apologize for being hard on DFJ and Bessemer; if I’ve written anything unfair feel free to correct me in the comments. My real point is to question the usefulness of TheFunded’s rankings and its service. From my VC days I know that we were far more likely to fund a company we discovered, than fund a company that discovered us.

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8 Responses to TheFunded.com Lets You Research Venture Capital

  1. theFunded says:

    Ultimately, we, at TheFunded, are not trying to evaluate if a fund is “hit” with respect to their investments. Rather, we are looking at the experience of an entrepreneur pitching and working with a fund day-in and day-out.

    There are dozens of great little funds that get overlooked in the process, and big funds that get too much credit. Sequoia, for example, started out with a 4.8 rating, dropping to 3.9 based on feedback from entrepreneurs that have dealt with specific partners there. Sequoia is a well known and great fund with an excellent track record, but they may not be the easiest to deal with as an entrepreneur.

    AND, in terms of being pitched by Venture Funds, I get weekly unsolicited funding interest in my current business. Who is good? Who is bad? Who should I ignore? Without some research, there is simply no way to know. AND, as the example of Sequoia above shows, sometimes an obvious track record may not be an accurate reflection the day-to-day interaction.

    IMHO.

  2. […] picking on only picking on Draper and Bessemer because they are fresh in my mind from my last post, The Funded Lets You Research Venture Capital. But I do believe all seed round Web 2.0 VC’s should reword their online submission policies, […]

  3. Jon says:

    TheFunded,

    You make very valid points. I wonder if my immediate reaction was a bit knee-jerk. Ultimately, your site could effect Venture Capitalists’ better treatment of their entrepreneurs, as well as provide a neat community for entrepreneurs to network.

    In fact, a social site for entrepreneurs may ultimately be your most winning feature. I’m looking for entrepreneur discussion forums on your site, but possibly I have to sign up to view them?

    I will follow your progress with great interest,

    Jon

  4. theFunded says:

    Yes. You must sign-up. Just click JOIN, fill out the form, and I will make sure you get approved.

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