TheFunded, the site that lets startup founders leave anonymous reports on VCs they’ve encountered, has been issued a subpoena by a small Michigan based VC firm called EDF Ventures.
The firm is apparently going after an anonymous user who posted the following on TheFunded on October 12, 2007:
“Worked with these people on several deals and they are to be avoided unless you are desperate. Beaus Laskey, the only honest straightforward person in the bunch, has left the firm.’”
TheFunded’s founder Adeo Ressi responds:
The anonymity promised by Membership in TheFunded has been confirmed by leading programmers and by corporate counsel. Should EDF Ventures proceed with their request to subpoena records surrounding a post titled, ‘Avoid,’ TheFunded is certain that the anonymity of ‘John Doe’ will be now proven in a court of law.
When TheFunded was conceived, we understood that some investors might attempt to take legal action against the views of entrepreneurs. In order to prevent this form of censorship, TheFunded has been carefully designed and takes extensive measures to protect the anonymity all those who share their opinions on the fundraising experience. TheFunded does not store IP addresses, email addresses, or any other personal information associated with a Member account in any database or any file system operated by the company.
For every CEO that shares an experience, there are nine others who are hesitant. The worst stories of investor abuse remain untold, and TheFunded hopes that this test of Member anonymity will help open up floodgate.
The Founding Member, Adeo Ressi
There are a lot of VCs who hate TheFunded for exposing character flaws, and posting term sheets. Earlier this year someone launched a parody site called The UnFunded (since taken down) that allowed VC’s to rate the “clueless” founders who wandered into their offices. But taking legal action, especially against such a minor “offense”, is extreme.
EDF Ventures is the worst venture firm out there. (I wonder if I am going to get subpoenaed)
Isn’t that obvious that the author is that guy who left EDF, Beaus Laskey?
No, since TF vets entrepreneurs and they don’t allow VCs.
EDF is certainly a firm with a relative poor image in VC fraternity and this is obvious response from their side(EDF sucks !)
These guys are wasting their time, haven’t they ever stumbled on any of the _____sucks.com sites?
Based on their actions, I am pretty sure they haven’t.
I can see why they want to find out who posted it.
a portfolio can say alot about the character of a company.
http://www.edfvc.com/it.html
Brilliant firm. If their bad reputation hadn’t been seen by everyone before, it sure is now!
That comment is nothing compared to some from other firms!
I work in an industry where the fear of something like this prevents us from creating great community features on our website. Features as simple as forums, reviews, or even simple tagging.
Hopefully companies can move past their egos and allow the consumers speak!
This is silly. They are already getting some god-awful publicity off this misguided attempt at censorship.
Are these guys dumb? They should have realized that suing TF would just give them more negative attention. What a boneheaded decision.
There is no anonymity online, nor the ability to promise such, and to promise that with the thumbs up from legal council results in malpractice.
Nonsense. Look into strong crypto.
Well Linda, you’re an idiot. I’m posting this from a public internet terminal, routed through tor, and using a fake email address. Try and find me.
Actually, I didn’t take those precautions, but I could have. And you’re still an idiot.
would it be safe to assume that’s your real picture?
You can design an anonymous system that makes identity determination inconclusive at best, which would not survive any reasonable burden of proof. See the following link for how anonymity works on TheFunded:
http://www.thef...itations/help#2
You should have a cron clean out your apache and mongrel logs hourly. That would would nuke any data you would have on posters.
If a court subpoenas the data, you can tell them it’s your policy to have automated log scrubbing as part of the service.
Now the expert for the prosecution is going to ask for your apache or mongrel logs if you don’t flat out provide the user records.
You should nuke all the anonymous user data out of the database and have an apache and mongrel log scrubber if you intend to have people trust it and keep posting info.
They’ll take the dumps and scroll down to the post URL coinciding with the date/time of the post from the anonymous person they are looking to reveal the identity of. If you mysteriously make it disappear after the fact they’ll say you tampered with evidence.
That’s why you should have made it a policy to scrub logs.
All logs are either disabled or destroyed to ensure that IP addresses and other information are not stored, including logs from Apache and Rails.
“All logs are either disabled or destroyed to ensure that IP addresses and other information are not stored, including logs from Apache and Rails.”
If you didn’t zero the log data on the disk, forensics experts can use something as easy as
dd if=/dev/hdc | strings > nextfilter.dat
Then widdle it down to the log data with the post url and date/time/ip
“All logs are either disabled or destroyed”
They are either disabled or destroyed, but not both, and you seem to be unsure of which.
The server contains multiple log types, so, depending on the log type, they are either disabled or destroyed.
“The server contains multiple log types, so, depending on the log type, they are either disabled or destroyed.”
The type of log that would contain the user agent information from the browser and url document requested from the browser is only 1 type of log though. IT could only be disable OR destroyed.
If it was destroyed after the fact, the data could still be pulled with a hard disk dump and advanced filesystem tools.
BUT
Unless they subpoenaed the server from your data host, it doesn’t matter. Going through a server like that meticulously to determine if data was destroyed is extremely costly and time consuming. It would be something done over a serious crime, not this.
TheFunded,
I like you, so I will give you a word of advice. When you have been subpoenaed or are in any legal situation, NEVER come on bulletin boards or blogs offering details or information, unless it’s to refute a claim.
In the case of refuting a claim against you, you should keep repeating the same clear message over and over again.
One to grow on * * *
http://www.rottenneighbor.com it’s kind of like the funded except everybody is a potential target for anonymous character assassination.
EDF should take anonymous entries for what they’re worth…zilch.
By doing this one could construe that they’ve put a lot of weight behind it where it was simply an anonymous entry before.
There was a case similar to this one in California
http://digg.com..._site_Wikileaks
I think the ACLU got involved.
Hahha.. you don’t know what you’re talking about Mr Jones. Anonymous entries are worth MORE than signed ones since with anonymous ones, the poster is free to say the truth.
WOW this group at EDF Ventures must be really desperate for deal flow.
Their Limited Partners should dump them for being morons.
“has been issued a subpoena by a small Michigan based VC firm called EDF Ventures.”
What does this mean? Does this mean the judge after reading the complaint issue the subpoena?
If the judge issued the subpoena because I know for sure VC firm can’t, then the judge is abusing his power. The cause does not justify subpoena. Maybe the VC has connection with the judge and the judge thinks he/she can abuse his/her. I want to know the name of this corrupted judge.
I’m an idiot too, just more transparent.
I used to hate VCs until I realized it had no effect on them. (insert chuckle here)
Listen, the problem with TheFunded isn’t the idea itself, it’s the membership. I see so many posts there from what appear to be hostile, immature entrepreneurs–posts that might have some truth to them, but I find them unreliable because of the attitude, and there’s such little fact conveyed I can’t tell what to believe. I recognize hostile and immature because I was that. Like last year, and I’m 40.
TheFunded guys–please coach the startups on presenting what happened factually. The slanderous stuff is sometimes funny (and maybe not even slanderous and just dead on), but it really just gets in the way.
If startups simply present the facts and let other startups make their own judgments about the quality of the firms, nobody gets hurt, yet the startup world has been served, andbetter than if you flame every VC that decides to wipe his nose instead of paying attention to you.
That said, I know a number of VC that absolutely suck. So I don’t call them, and we’re both better off for it. I don’t flame them. I’ll rate them and present the facts, if I post at all.
Now all of you bow down and worship me for my restraint. And my fear of attorneys.
Why should an annonymous poster be able to write “the only honest straightforward person in the bunch”?
1) Did he meet the entire company?
2) Did every member of the team lie to him?
3) Can he prove it?
Some of you commenters should think about what you’re saying. Blanket statements that offer no substantiation as to the context of the meeting should hardly be acceptable.
Does every angry muppet pitching a lame brain idea and being rejected have the right to publicly slate an organisation? At the very least, the forum for discussion should allow both sides of the story to be discussed.
Since when are we so pathetic that we’ll make slanderous comments and run away from the consequences. The whole point of the suit would be because the comments are not fair and they want an opportunity to right it.
@TheFunded – Offering an annonymous platform for slanderous attacks shows little creativity on your part. Think your proposition through and come up with a better solution.
Most posts, like this one, have more of an explanation for the views expressed in a Private, Member-only section. The Member-only portion of this post is longer than the Public portion, which you see above.
You can definitely build a system that protects its users by keeping – or rather not keeping – a lot of the information that is valuable for obvious reasons. Having been on the side of building none-repudiatory system for a while, I can tell you how to build systems where every action (request) can be contested. It is not that hard!!!
Right. So you display slanderous public comments and keep the substantiation to a private area, which clearly does not substantiate the allegation or there wouldn’t be a legal action being brought against your website.
The point you’re missing is that the platform is meant to discuss experience, not trash talk a company and run away from any responsibility.
Through your own replies, you’ve displayed immaturity in attempting to gain a PR advantage in gaining favour with your cries of protecting annonymity, while completely ignoring the fact that individuals have a right to defend their character against defamation.
Run off and go delete your logs. See if you can be the only platform in history to completely absolve themselves of responsibility. I have good money that says you fail. A slightly more responsible tactic may be required.
Get rid of the muppet users on your site whose comments are worthless and defamatory, and keep those which offer an insight into the good, bad and ugly.
To all the muppets commenting on how to technically create an annonymous platform, do you think doing so absolves you of any responsibility in what is published on your platform? Doh. There are legal ramifications to what you can and cannot say about someone.
Next time you Google yourself and find a hundred comments calling you a mass-murdering rapist, do you really want no recourse to having them removed? Well, how would you like similar comments made about your business on a respected platform?
Fools. Read the comment made. It’s a slanderous generalisation.
@Timothy: Membership of TheFunded is comprised of CEOs and founders, and each Membership application is carefully screened. Approximately 75% of all applicants get rejected.
The Members that post opinions on investors are not random people on the Internet. They are business leaders, and TheFunded takes protecting the anonymity that they need to post with confidence seriously.
Gimme a break. The Funded may have flaws, but it’s terrific. Never before has this one-sided industry had any transparency whatsoever shined on it.
It performs a huge public service by stopped VCs from telling you the same crock every time (”we can’t do this” “we always take 90% in each round” “a down round is good for everyone”) and by forcing them to treat founders like human, not meat.
Why can’t people trash talk? It’s a human thing. If you call me name, tell me my spelling is bad, my grammar is bad, that’s trash talk. The distinction between commercial speech and free speech are converging. Before the Internet, humans make up a bunch of different rules and regulations to govern the way speech is being presented and said. Now that the Internet provides everyone — not only US citizens — a voice to be heard on a website of their choosing. Let see a government go ahead and crack down on people’s free speech be it commercial or free speech because at the end of the day as the Internet become more efficient, the government itself will surrender to the market force that governs the displacement of humans.
Free speech lives on!
The best reaction to online negative publicity is to engage in a dialogue, not to try to stop the online conversation. Respond with positive consideration and positive results and discussion. Credibility is earned online, not given. Interesting reaction on the part of the VC. Perhaps they could learn from some additional research into social media.
You can understand why they want to know!
a VC from Michigan….looks like absolutely everything from that state sucks!
BTW, imagine the precedent this sets if it flies.
All Yelpers and reviewers across the web will get subpoenaed!
This lawsuit is already in the deadpool!
What the anonymous poster wrote is perfectly legal…..check out the court decision for a similar case.
http://www.aclu...rs20001003.html
I am an entrepreneur who has yet to raise VC money and hope I never need to. With that said, I do know many VC’s and some I would never approach for an investment. Others are great guys with real value to add to companies.
The good VC’s don’t have that much negative information on them. If you suck at what you do you should be slammed, those posting should also be required to at least give a first name.
The lack of intelligence in these comments is surprising.
I am not saying that free speech shouldn’t be allowed, or that the platform isn’t an excellent one.
I’m saying that a comment should be clearly thought out and justified. Saying that an entire company is dishonest is hardly constructive, it’s simply defamatory.
For a usually educated audience, the bulk of you moron’s are completely missing the point.
If you call someone a moron then why would you believe the words coming from the person.
I wonder if this negative attention will be any good at all?
What are the chances that the one ‘Disagree’ (top right corner of image) came from an EDF employee?
In any case, I think EDF’s actions confirm the veracity of the review.
(linkback) Fair or Foul? Venture fund firm subpoenas anonymous VC review site over comment [VOTE] – http://www.thri...rfail.com/96369
The problem with services like TheFunded is that there is no check/balance. You don’t know if negative comments are from other VCs trying to get an edge, which makes it a pretty useless service.
Ross,
How many times does this have to be said?
VC’s and ENTREPENEURS are SCREENED. Just because YOU don’t see the name, does not mean one does not exist.
They are going to find out that unmasking the posters can be extremely difficult. They are unlikely to survive any test of personal jurisdiction in that state, and will have to move to California (assuming that is where theFunded is based) if they are at all serious. Of course, then they will be open to California’s anti-SLAPP laws, and may find themselves on the bad side of a judge here. Then there are the serious First Amendment rights they are trying to take away — as if people haven’t tried before — so their attempt would likely be quashed anyhow.
I have to seriously question their counsel’s advice in this matter. Usually, the chilling effect of such a lawsuit works best on those without knowledge and resources at their disposal. Not the type of people a VC firm would invest in, so the scare tactic part is a bit impotent out of the gate.
Makes me wonder if it’s just a publicity stunt (even bad news is good news sort of thing). The case can’t stand up in court and there may even be precedents established denoting that.
Our company has been seeking VC / Private Equity funding for months now. I can say, if only I knew earlier about thefunded.com (and no I don’t work there). We’ve received the cold shoulder from so many that tout this ‘love for entrepreneurs’. I get it people. Go get them thefunded.com — more sites need to be out there helping people find the inside perspective before jumping in knee deep.
I’m checking out more firms now – - -
EDF has no legal ground to stand on here. The comments submitted are clearly protected by the 1st amendment. The only exception to this would be if the statement was either 1) defamatory or 2) an invasion of privacy. The comments here are clearly an opinion, and thus by definition, aren’t defamatory.
The funded is protected by the CDA, which immunizes the funded in the event defamatory statements are found to be made. Because the post is anonymous, the best EDF could hope for is for the funded to remove the post. But, the funded has no legal requirement to do so.
So, I’m not sure why EDF thinks they could succeed here. A smart lawyer would have told them not to waste their time on this, as they should just focus on doing their job — earning 5x on their investments!
EDF’s focusing on this suit just shows that they’re a bottom tier VC.
I have used TheFunded to give honest and blunt feedback…some good, some bad. Now I am very worried that the VC firms that I gave honest (but negative) feedback on will come after me! I am not a ‘techie’ so all this stuff about security and anonymous identities on the web goes over my head. How likely is it that anything will come of this? Should I go back in and delete all (good and bad) of my comments on TheFunded’s site?
Dude (funded entrepreneur) you are screwed! They are going to nail your *ss to the wall! They will track down your IP address, your ISP, your e-mail, and everything. Be prepared. Get a lawyer!!!
@T3chsclusive – You’re a know-it-all ass who doesn’t know anything about the law. As someone who actually spent three years getting a law degree, I don’t see anything here that opens up TheFunded to increased liability. Linking to publicly available pages on their website and repeating well-known information about their privacy measures is not all that risky from a liability perspective. Besides, it’s rather arrogant to assume that their legal counsel isn’t already screening their responses.
TheFunded has been subpoenaed for information they may or may not have, there is no allegation from EDF that TheFunded has done anything wrong. EDF is alleging that the anonymous user has done something wrong and that they have the right to collect information about that user in order to prepare a suit against that person. As long as TheFunded complies with the subpoena order or responds with appropriate legal arguments as to why they don’t have to comply with the subpoena order, there is no liability issue.
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