TheFunded started publishing a list of top rated venture capitalists today. The ratings are based on reviews (either anonymous or not) written by entrepreneurs who’ve pitched those VCs.
Should you pitch VCs that have higher ratings? No. Their rating is irrelevant, and some of the VCs that have the best track record at picking, building and selling companies also have the worst reputations on the site. Whether reviews come in positive or negative, they aren’t worth much. Rejected entrepreneurs always want to blame someone for their failure - one place to turn that anger is TheFunded. Funded entrepreneurs want to get points by saying how great a VC is - and they, too, turn to TheFunded. At the end of the day, TheFunded is a great read, but the reviews are worthless and conflicted.
Do you really care if a venture capitalist shows up to your meeting ten minutes late or forgets to offer you a beverage? If a VC goes out of his or her way to be nice to you, is that really a reason to take money from them?
Think of it this way. If a VC stops a meeting early and says they’ll get back to you (that means “no thanks, we’re passing”), they’re doing both of you a favor. A deal isn’t going to happen. It’s far better to turn your attention to the next door down on Sand Hill Road than go moaning about it on TheFunded.
Focus on your business, and if you are lucky enough to have your choice of VCs when raising funding, take the best terms from the best branded VC you can get, even if you don’t get a latte when you drop by their office. Your goal should be to build a successful company, not have your ego stroked.
Life is too short with work consistently with people you don’t like.
Good advice, I really like the personal touch with this post.
I couldn’t agree more. That site’s comments are so rife with bitterness, plants and ass-kissing that the reviews become almost worthless at face value.
So it’s actually no different than *any* internet forum.
Just one note: “It’s far better to focus on your business, and if you raise funding, take the best terms from the best branded VC you can get, even if you don’t get a latte when you drop by their office. Your goal should be to build a successful company, not have your ego stroked.”
“Best branded VC” is really not so important, except for a company-wide ego boost. What you want is the best strategic partner offering you the best terms. Does your potential firm have a history of experience and succesful exits in your specific space? Do they make it easier to hire key people and execute crucial business development deals? Do they check in on your business regularly (outside of board meetings), visit you on-site and answer your emails/calls quickly? Do they believe in your business even in the tough times?
Any and all of these aspects are worth a heck of a lot more than any brand.
Avi - certain VCs are know to have a golden touch, and when they invest in a company people pay closer attention. It can give you an extra marketing and PR boost, and may allow for easier partnerships. The top VCs remove friction. It isn’t a guarantee of success, and you still are likely to fail, but it’s definitely a good thing.
No one gives a crap about whether or not your VC is nice, though.
“Your goal should be to build a successful company, not have your ego stroked.”
Well said.
I’m with Boris.
I wouldn’t sign myself up for a five-year long fight that I could see coming.
Just as I’ve heard investors say they will give some overly critical feedback just to gauge how open the entrepreneur is to listening (without necessarily changing beliefs), I think the entrepreneur should make a point to get a glimpse at what the hardest conversations will look like.
The best VCs will listen to what you’re saying, vocalize if they disagree, but be open to other viewpoints. That kind of attitude (from a quality investor) is going to go a long way to increase the odds of success.
Spot on advice. The VCs to talk to are the ones who are the best fit for your company based on their operational experience and portfolio focus. Regardless of their rating on thefunded. Not only will you have a better chance of a positive outcome, but if it doesn’t work out their feedback will be the most valuable.
I’ve met and pitched to a number of VC’s who have terrible feedback on thefunded, and in most cases I suspect its just because entrepreneurs dislike hearing blunt truths about the companies they’ve poured their hearts and souls into. But in almost every case the comments and introductions and been incredibly valuable… even if they weren’t delivered with a smile.
Thanks Michael Arrington! Good advice. I was always curious about VCs. Here in the blog and the comments, i am sure, i am going to learn a lot.
Good Advice…thanks.
“Your goal should be to build a successful company, not have your ego stroked.”
it is something we have been practicing in our company since years…. n it works
Mike, your last graf is dead on and says it all. Building a solid and sustainable business and getting the best terms (that you can live with) from the best VCs is what matters most.
Nobody wants to read comments from whiny and bitter entrepreneurs (those are the worst), but constructive criticism is good and can help novice entrepreneurs as they seek funding.
And I did love the stir caused by Adeo before he launched the Funded and all the speculation of who it was, and the ruffled feathers it caused after launch. A little controversy is always good. It keeps life fun!
Mr Michael Arrington you still owe us (especially those Chinese people) an appologize for your stupid post yesterday. Face it! You think this would just fade away?
The problem is mutual.
One common grief about the VC’s is that they don’t like to return emails/calls.
From the entrepreneur’s angle, the VC’s are big-nose arrogant rich asses.
From the VC’s angle, if VC#1 returns emails/calls even with a one-liner or even one-word email, the entrepreneur will go to VC#2 and say “we’re already talking to VC#1″.. and to VC#3, “we’re already talking to VC#1 and VC#2″, and so on and so forth.
Ended up, the VC’s only like to work within their own circle, and work with people from “proper introductions”. Social media? Might be. Might be not.
It’s mutually stupid, always. There’s no good solution, other than just focus to build your company — successful or not”
Your post has some merits but “the funded” is a great resource for entrepreneurs.
Getting funded has two main components: 1) idea/product and 2) everything else. Rarely a company gets funding because of the “idea/product”. Some people might not agree with this statement! The Funded really helps entrepreneurs with the “everything else” part.
Knowing what to expect when pitching some of those VCs is great help.
@11 — I’m Chinese and very nationalistic and patriotic, but seriously I don’t feel offended.. though, as said before, the timing was indeed unfortunate…
Henry - keep hitting refresh, that apology is up next.
Brilliant post!
Like 90% of the web. The last thing we need is another gripe site.
Get something done.
The funded is a good resource for keeping the system a bit more balanced.
To say if your VC is an asshole doesn’t matter is just not true. Remember, entrepreneur’s build companies and all capital is well equally green. As I know Motwani has said, no VC can make your company but a bad one will ruin it every time. A bad one will almost certainly ruin your return as an entrepreneur even when they make themselves a return.
VCs commit lot of crimes, who cares about the beverage. What is wrong in having a little competition among VCs and do the business eithically. They are just middlemen, if you look at the statistics 70% of them have never started a company or built one.
I would suggest remove this post, it puts the hard working entrepreneurs in the bad light.
Well said Michael!
It is not about bitching about VCs, it is about the inherent conflict between VCs and entrepreneurs.
In the VC game you will get to an exit if you are lucky in 4-6 years when you have +/- 10% of your company, and you will get your $15m on a $150m exit.
With some companies you can get to the same exit without VCs in less time and less risk, e.g. Internet companies.
Want to read some real stories go to http://www.thefoundersbook.com
also:
Dont’ expect an apology when they end the meeting by shouting, “enough! I heard about you - you’re the tow truck guy”, and then shoo you away with a backward wave of the hand.
And, don’t expect an, (i’m sorry, let me pay for damage, when they back into your Apirlia 500 Italian scooter in their parking area with their Mercedes SUV, and try to run away when you come upon the scene.
What start-ups often forget is the other side of the coin. VC’s get hundreds of proposals a week, ranging from ridiculous to laughable to shear brilliant. They get pitched to on parties, in forums, on their blogs and if after all that, they actually take the time to invite a start-up, the last thing I would worry about is getting a coffee. What is important that start ups focus on delivering a great presentation and they connect on a personal level with the VC.
If the VC says ‘thank you but no thank you’, then get up, shake their hand and get on with it. Remember, you never know when you will meet/ need them again so don’t go slacking them off on ‘The Funded’. This isn’t Kindergarten, this is business.
The list may be worthless but everyone loves rankings (especially, I’ll wager, VCs) so I reckon messrs Archambeau and Solvik are feeling pretty pleased at the moment.
It’s a little hard to take advice about bias and conflicts from Michael Arrington. It’s also hard to take advice about building a company from Michael Arrington — think Edgeio (failed) and OmniDrive (failed).
People who live in glass houses, Mr. Glassington, don’t throw rocks!
@20 ofer whats the point ?you offer for us tom readthe stories but when going to your link when you cant read the stories ?? you need to open the site if you gonna say “want to read some real stories” when you can t read them i don’t see the pint.
question: a vc has given me an hour meeting, good feedback, and left the door open for another meeting once we fulfill one request re: “more focus”. Another vc has approached a founder at an academic conference. They spoke about that area of analytics we specialize in, but not about any investment or company. We plan to follow-up with this second contact. Both firms are well regarded. Should I mention to the first vc that we will be approaching the second — we may have a meeting set up soon??
Personally I do not want to “push any buttons”. I thought it was incredible we got 60 minutes, and excellent feedback was provided. If we are a good investment, then I’m expecting things will work out — naive perhaps, but I sort of agree its ultimately about (product) * (opportunity to talk about it). I was afraid we’d never get the latter — very tough unless you have contacts. But we are getting a fair chance now. Input appreciated, and apologies that I’m not divulging contact info, but that’s not appropriate I think.
I really liked this post, and agree that your VC’s brand makes hiring and probably marketing too a lot easier (hiring is more important than marketing), but there is one other criterion for evaluating a VC that you have to mention, which is how much the partner you meet will engage in board meetings and beyond. There are no-name firms with partners who have relevant operating experience, or who try harder, or whom you can just naturally talk to about the problems you have to solve, and that has to count for something.
I’m always a little surprised when entrepreneurs go for the best terms or the biggest brand without even thinking about whether the person who will be on their board is someone they can work with and talk to about what’s really going on. Usually it’s because the entrepreneur thinks he or she already knows everything and just needs the $ and attention, which is sometimes true I guess — but not always. Glenn at Redfin
Ha!
Re: #24 — Mr. Glassington!
yeah, this guy’s reputation is clearly in a freefall. Time will tell how it effects traffic to the site.
hmm… don’t know if I agree on this one mike.
the funded has obviously biased / skewed data, but it might still be relevant.
“best-branded VC”? maybe, assuming the term sheet & liquidation preferences are equivalent to the deal you’d get from a “less-branded” VC. except you probably won’t. so there’s typically a tradeoff there somewhere.
brand is relevant too, but may matter less than deal terms.
If this site matters so little, why do you keep talking about it?
Dave,
Totally agree that deal terms are usually most important things to focus on. The brand of the VC has superficial value in most cases. It sometimes helps with early recruiting of key employees if and only if the founders are good at spinning the value. If they are not then the value is pretty meaningless.
I think The Funded serves a purpose. We all know it’s easy to wade through this world if you’ve got the connections. Most don’t. >1% of all companies seeking funding get it from VCs. That’s a lot of wasted time/ meetings that go nowhere. Yes, the process can be aruduous on both sides. VCs have to sit through reams of endless pitches. But from almost all the entrepreneurs I know and have worked with, most of them have no connections, and most don’t ever get 1 term sheet, let alone multiple. That’s like the golden ring that rarely happens. The ones that do are the ones that usually have at least one connected person associated with the company - then once 1 VC shows interest the others will often follow. Easier to get the 2nd million than the 1st million. Some do it thru sheer buzz, but for every company who’s a silicon valley darling I’d be willing to wager my salary there are 100+ companies who get no notice.
A VC told a company who had just started requesting meetings but hadn’t had any pitches yet once “we heard about you from another [VC] firm.” Entrepreneur thought this was a good thing. VC went on with the admonishment “VCs want to feel they’re special. Since you’re ‘out there’ you’re tainted goods, means to us that no one is biting.” Yet the process is so time consuming, to say entrepreneurs should focus on their companies is easy to say when trying to get meetings etc. is a super-time consuming process, so who wins here. because of the in-breeding, I would venture to say that something in the process is broken.
Can’t agree with this one. I find TheFunded posts to for the most part be spot on based on my own experience pitching. Some VCs seem to just like to torture early stage companies and their founders even though they have zero interest in them and it is immensely valuable to know who they are so you can avoid wasting time with them.
The thing you have the least of as a founder is time and TheFunded gives you a bit a leg up - as minor as it may be.
Plus the other resources on the site - deal terms, forums, etc. are excellent.
Like many of the posts on the funded this brings up some reasonable points.
I use reviews of doctors, plumbers, ebay sellers, everything. If you learn to read between the lines, you can generally find a good fit. For example, a review that doesn’t go pro or con, but talks about a certain vc’s strengths and weaknesses (good on marketing, bad on tech, good on strategy, bad on bringing in a good ceo, etc) … you’ve hit pay dirt.
The same goes for reviews of doctors (good with children, bad with men’s ailments, etc) ..
These “gripe sites” are extremely valuable. They are ’structured gossip’ which is the only kind of valuable gossip. Nobody wants to waste time, VC or entrepeneur, and information is critical for that.
One thing I think all VC should do, though, is give good feedback. Unless they are a high brand, I’d hate the idea of pitching a VC that doesn’t give good feedback.
Also, if you get some indication of a VC’s personality from the website, you know what to expect and when, which reduces miscommunications.
For example, if a VC regularly cuts off people in the middle of a presentation, then you know you haven’t done something to make someone particularly mad .
But if respectful VC (who’d I’d pitch just because I’d enjoy it and I like enjoying life) cut me off, I’d ask him with concern - have I done something to offend?
Anyways, a part of me wonders if Mike actually has a bias against the Funded because they have a deal with their competitors, Venture Beat.
Another thing strangely not mentioned above anywhere, is that you’re not signing NDAs. Do you really want your ideas passed around?
Not really. It’s not just time, you want to pitch VC’s who have a high chance of success, because as soon as you pitch someone else, all your best ideas are going to be public domain.
The Funded is a descent resource for some purposes, particularly with respect to some partners at firms. Of course there are inane comments on it from disgruntled entrepreneurs . . . which the reader needs to ignore. Sadly, there are as many inane comments in response to TC posts. Bad reviews don’t make TC a bad resource.
Well said!
Choosing a VC is like choosing your co-founder with two differences: (1) you have less time to choose a VC, and (2) the VCs will have more control, in most cases. To gloss over experiential research of VCs in the selection process is foolish, naive, and dangerous. To shy away from honestly contributing to the community as a funded CEO only allows others to make the same mistakes.
78% of the 7,500 CEO Members of TheFunded have closed a financing for their current business.
A small number of frustrated venture capitalists have propagated a fallacy to the media that (a) unfunded CEOs (b) use their limited spare time while running a business and raising capital to (c) write vengeful reviews of a person that they spent 45 minutes to 1 hour with. Besides the fact that this argument seems illogical, it is not supported by the data, either.
Here is the reality. First, the majority of reviews are driven extreme experiences, either good or bad. A mediocre venture firm or venture capitalist does not get reviewed often, if at all. Second, the next most common set of reviews are coerced by the venture capitalists themselves, such as this public comment where the CEO checked that the fund requested the review: “My experience with XXX is that he asks more questions during a meeting than other VCs, really listens to your answer about as often as other VCs and figures things out pretty quickly. Some of the things he figures out are actually correct.” As you can read, there is a hint of skepticism in the praise.
The least frequent review is the jilted entrepreneur seeking revenge. Less than 0.05% of the 11,500 reviews fall into this category, and they are pretty easy to spot, such as this title: “Possibly The Worst Vc That Ever Existed.”
Unfortunately for the entrepreneur community, there is no other good experiential data source on venture capital. Most journalists are afraid of libel suits, and most entrepreneurs are afraid of speaking on the record. Constructive criticism on how to make TheFunded.com better is 100% welcomed.