What do entrepreneurs want from venture capitalists? A new Cornell study by Ola Bengtsson (now an assistant professor of finance at University of Illinois Urbana-Champaign) and Frederick Wang looked at the stated preferences of entrepreneurs as expressed in comments and ratings on VC-ranking site The Funded. The study, which is based on opinions from roughly 1,500 entrepreneurs about 526 U.S. venture capital firms, tries to assess what they value the most from VCs.

In general, entrepreneurs view independent venture capital firms more favorably than strategic, corporate, or government VCs. They do a pretty good job of identifying which VCs have the best track record (which Bengtsson checked against VentureEconomics data), but just because a VC has a good financial track record doesn’t mean he or she will be the most helpful. And one of the things entrepreneurs value the most from a VC is quick feedback (positive or negative) when they are doing due diligence because time is money, and startups don’t have much of either.

Bengtsson shares some of his conclusions:

1. Entrepreneurs can correctly identify which VCs have the best historical track record but they do NOT perceive these investors to be more able to add value pre- and post-investment. This result is surprising but found in my analysis of more than 1,500 unique entrepreneurs and 500 VCs.

2. Entrepreneurs view private partnership (independent) VCs more favorably than other VC affiliated with corporations, financial institutions or government agencies. Thus, independence is good.

3. Entrepreneurs who have interacted with more VCs have a less positive view of these investor’s ability to add value pre- and post-investment. This suggests that entrepreneurs learn over time that each VC is less unique and useful.

4. Entrepreneurs like when VCs conduct fast due diligence and give feedback on the business plan. Time is a scarce luxury when you run a startup.

5. Many entrepreneurs express concerns that some VCs have tensions within their organization/partnership. The entrepreneur may like the VC partner he meets but turns down the VC because of potential internal conflicts.

Bengtsson admits that there is a potential for selection bias in his study since the data comes from entrepreneurs who choose to be vocal about their opinions on The Funded. But he also points out that “they at least reflect how an important population of entrepreneurs evaluate the VCs they have encountered” and that when he dug into the data he didn’t find an unusually negative or positive bias. More importantly, the study tries to make conclusions about how preferences differ for different types of VCs. If The Funded attracted overwhelmingly negative entrepreneurs, that wouldn’t explain ehy they prefer independent VCsand private equity partnerships (PEPs) over corporate VCs or their ability to correctly asses a VC’s track record. The study is embedded below.

What MAtters In Venture Capital? –

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Now, a lot of people, including prominent angel investors and venture capitalists, are starting to listen to him. Tomorrow Ressi will announce a new, basic term sheet for use by investors and founders. The goal is to protect founders and reduce legal fees, which average $50,000 or more per venture round.

Earlier this month angel investor and Hunch founder Chris Dixon wrote a blog post requesting that venture capitalists start to use standard, founder-friendly deal terms for venture rounds. He set out the terms he proposed in that post. Said Dixon: “My preference is to keep all terms as above and only negotiate over 2 things – valuation and amount raised.”

Investor Fred Wilson agreed with Dixon. In a post titled The Ideal First Round Term Sheet, Wilson said: “Chris laid out the ideal set of first round terms and I agree with them. What’s interesting is that Chris is a serial entrepreneur and I am a VC. And yet we agree on what the term sheet should say. That’s progress.”

Now Ressi has published an actual term sheet that investors and founders can use that reflect those basic terms. The term sheet is here, and is also embedded below.

The key terms include the elimination of participation with preferred stock, a 1x liquidation preference, and single trigger vesting acceleration on acquisition.

What this means: VCs try to increase returns by asking for large liquidation preferences. A 3x liquidation preference, for example, means the VC gets to take out 3 times his/her initial investment before founders and employees get anything. So if you raise $10 million at a 3x liquidation preference and then sell for $25 million, founders and emplyees get nothing. With a 1x liquidation preference, the VC is only able to get the initial investment back before others take their share.

More importantly, participation is eliminated. VCs often ask for this. What it means: Participation rights means the VC gets to take a pro-rata share of money in a sale even after the liquidity preference. With it eliminated, the VC has to choose – either take their 1x liquidation preference or convert and share with common pro rata. For any large deal, they will convert and be treated like the founders and employees.

The single trigger vesting provision is also important. VCs like to keep their founders locked up so they have to keep working even after an acquisition. The provision, called double-trigger acceleration, usually requires a sale followed by a firing without cause. VCs want this because it’s easier to sell a company if the founders are locked into staying on. Founders don’t like it because it sucks.

Most importantly, though, is the cost savings. VCs really need to move to a deal structure that doesn’t burn up so much lawyer time negotiating provisions that are almost never used. I could write 10 posts on how this nonsense works, and may in the future. A term sheet like this can be closed with $10k – $20k in legal fees. When you’re only raising $1 million, that’s a big deal.

Also see the Y Combinator investment docs that they published a year ago. Their documents are ideal for small angel rounds, and strip out a lot of the stuff covered in Adeo’s term sheet here. There are some terms included below that are needed in larger deals and which aren’t absurd for VCs to ask for. So both documents are highly relevant. Start with the Y Combinator docs for your first early angel round, and move to Adeo’s document in your first real round of venture capital.

We’ll highlight VCs that we talk to who indicate that they are willing to negotiate deals under these terms.

FFI Plain Preferred Term Sheet –

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The new documents, created by Wilson Sonsini attorney Yoichiro Taku, are posted publicly on the website. They have a variety of novel rights and privileges:

• Creation of a Class F Founders stock that has 2:1 board votes per founder and 10:1 voting power over normal common stock. These shares vest monthly without a cliff and have single trigger acceleration. Class F holders get acceleration on change in control and approval rights on new investments, liquidity events, Board size, and dividends.
• A clause that requires the payment of $100,000 to the Founders Institute in the event a founder leaves the board of directors to give a disincentive to firing founders down the road.
• Grant of a warrant to the Founders Institute to buy 3.5% of the fully diluted stock of the company in the form of the equity sold in the first round of financing, which is pooled for participating founders and mentors.

The stock grants and any penalty fees paid are put into an exchange fund that all participating founders have ownership in. Therefore, all companies participating in each class have some stock in all the other companies – a great way to reduce overall risk. One big winner in each class means everyone gets a little bit rich. 60% of the warrant stock goes to the founders, the institute keeps the other 40%.

There’s a risk that these extremely favorable founder terms could create problems when the companies try to raise outside funding. Ressi says they won’t let a financing die from these terms and will likely waive rights if forced to. His reputation will require that – if these agreements protect founders he’ll be a hero, but if they kill financing deals the program will collapse.

Applications for the first startup class are open until May 10.

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The Funded’s Adeo Ressi is now confirming that the shutdown notice he posted last week is part of an April Fools joke. He was unavailable for comment, he says, because he was “in remote Utah at a wedding.” Weddings are always an excuse for being offline, I guess, so we’re forgiving The Funded for going dark on the situation. And a wedding in Utah must be fascinating. But as to the hilarity of the joke itself, well that’s up to The Funded’s users to decide.

We enjoyed last year’s April Fools joke that involved the launching of a new site that let venture capitalists review founders that pitched them (from First Round Capital).

From: Michael Arrington
Date: March 30, 2009 10:21:26 AM PDT
To: Adeo Ressi
Cc: erick schonfeld
Subject: Re: FYI

something funny would be nice.

On Mar 30, 2009, at 9:28 AM, Adeo Ressi wrote:

Erick and Michael,

The message was a weekend prank for April Fools’s Day that was leaked to the media by Member saying that the site was shutting down “following a lawsuit.” There are no more threats than usual, and there was no mention of a lawsuit… The site is not shutting down.

In fact, the prank notice said that we would end reviews because we concluded all investors are great. We chose the weekend because of the low traffic levels, and we thought people would laugh at the claim that all investors are great. Instead, people just assumed the worst.

Ironically, I have been in remote Utah at a wedding, so I have not been able to send emails or update the site… An update is forthcoming, and I’ll need a better prank next year… Any ideas?

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TheFunded, a website that rates venture funds based on first hand experiences from readers, is shutting down on April 2, according to a notice posted on the site today.

This very well may be an April Fools joke, although founder Adeo Ressi has not returned our email requesting comment. The fact that the service isn’t shutting down immediately also suggests this is fake.

The site has been controversial from the start, and many investors have never been pleased with TheFunded. Last August the company was involved in a lawsuit brought by a venture capitalist trying to track the identity of an anonymous commenter.

TheFunded recently opened a new section of the site listing banned investors – that part of the site is no longer live.

We’ll update when Ressi confirms its real or a joke. The last part of the message, below, is so rife with sarcasm that I’m leaning towards it being fake.

The message:

Conclusion: Investors are Great

“On Friday, March 27th, TheFunded, Incorporated (’TheFunded’ or ‘we’ or ‘the Company’), in conjunction with counsel has concluded that venture financing and the purchase of preferred equity, herein referred to as ‘investing’ or ‘investment’ or ‘investors’, is both broadly and generally good for companies worldwide.

TheFunded will officially cease reviews on April 2nd, 2009, which, from time to time, reflect negatively on the many innumerable benefits of investors or investment or investing. We encourage companies to consider seriously taking investment, and we apologize for the following statement made in haste:

“investing is predatory”, “over 75% of investors are bad”, “avoid banned investors.”

The Company further apologizes for making any other statements and causing questions to be raised regarding the ethics and the good reputation of investors. Further updates are forthcoming Wednesday, and we encourage every Member to take an investment and then post feedback on the positive and rewarding experiences in Open Letters. Thank you.”

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What this economy needs to get out of its rut is more startups. Adeo Ressi, the founder of VC-rating site TheFunded, wants to do his part to help jump start the economy with fresh ideas and leaders. He is planning to roll out a start-up incubator, TheFunded Founder Institute (the site isn’t live yet), to groom young founders into CEOs. The Institute will play in the same entrepreneurial waters as Y Combinator, TechStars, SeedCamp, and LaunchBox Digital.

Ressi’s new venture is a semester-based startup camp for very, very early-stage entrepreneurs and students who have basic ideas for potential startups but have not yet founded a company. The classes will be limited to 150 students and will be a part-time commitment, allowing professionals the ability to hold their jobs (other incubators require entrepreneurs to relocate and take time off from work to attend programs). The students will be worked through an aggressive training schedule, where they will have access to lawyers, CEOs, and investors throughout a four month period. By the end of the semester, all the students will be required to have an incorporated company with a prototype and potential investors. With access to a wealth of CEOs and investors through theFunded, Ressi plans to provide students with a wide array of contacts in the tech industry.

Ressi’s says that what differentiates his incubator from others is that he won’t take any initial investment stake in the startups that are launched under his program. Instead, he plans to take out “warrants” on start-ups, where there is a mutual agreement that the incubator can choose to invest in the startup at fair market value, as determined by a network of investors within the four month window of the program. Once the startup enters its first funding round, the incubator will be able to exercise the warrant. This differs from Y Combinator, a well-known incubator which has nurtured and produced innovative startups including Reddit, Loopt, Justin.tv, Xobni, Disqus, and Scribd. Y Combinator gives startups a base sum of $5,000 as well as $5,000 per founder in return for a 2 to 10 percent ownership stake in the company. The benefit of this is two-fold; the startup gets money from the get-go and Y Combinator’s investment adds legitimacy to the startup when it looks for investors down the line.

Ressi also says that the Founder Institute’s model will focus on recruiting only early-stage entrepreneurs who have not previously founded a company. “We’re searching for more unusual, unique founders from a variety of industries who can be groomed into successful founders,” he explains. The institute is focusing more on the quality of a potential entrepreneur than on the potential of the initial idea for the startup.

The inaugural class begins in late Spring and Ressi will start soliciting applications online in the near future. At the moment, Ressi is putting together the curriculum of the program (which can be found here, but he warns that the site is not ready and may crash). While the Institute will be based in the VC hub of Silicon Valley and will take place twice a year, all of the curriculum will be available online to the mass public.

The Founder Institute is a novel model somewhere between a crash-course in executive education and a proper incubator. It will focus more on investment in the founder and less on the idea. Y Combinator’s idea-focused model has been proven to be a valuable springboard for startups as well, both in terms of incubating viable startups and finding investors for those ideas. In the current recession, we can use all the new CEOs and startups we can get.

Thanks to Scott Scheper for the tip.

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At a recent presentation at Harvard Business School, Adeo Ressi argued that the VC model is broken. That is nothing new for Ressi, who is the founder of the VC-rating site theFunded. He is kind of like the Nick Denton of the VC world, always saying that the sky is falling. It’s just that at this moment he happens to be right.

The slides from his presentation are embedded below, but really all you need to look at is the one above. It shows that the money going into VC funds is now more than the money coming out of VC funds. That line was crossed last June and there is no going back anytime soon.

The big institutional investors who tend to put the most money into venture funds as limited partners are hurting right now. They’re other investments have gone south, they are over-leveraged, and there is buzz that some are pulling back from their commitments to venture funds. They certainly aren’t eager to pour in more money, especially when the net returns just aren’t there any more.

When the lines cross over again, we can all relax. But until then, it won’t be just startups that need to tighten their belts. VCs are on notice too. Their once-flush investors are now squeezing every penny. And some VC funds just won’t make it.

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If startup CEOs want to anonymously rate, review, and criticize venture capitalists, they can still do that on TheFunded. But the site added a feature today called TheFunded Connect that lets members help each other with what they really want: introductions to those same VCs.

CEOs looking for funding can put up brief pitches, solicit comments from other members to refine those pitches, and ultimately get personalized e-mail referrals to VCs on their list from other CEO members.

Adeo Ressi, the founder of TheFunded, cringes when I ask him if he is trying to turn his site into a social network for entrepreneurs. “God no!” he replies. But when entrepreneurs network, it is to make business connections, which is exactly the purpose of TheFunded Connect. (Perhaps it is more a business networking feature than a social one, but you get the idea).

As part of the pitch, CEOs identify how much they are hoping to raise. For instance, Erik Weaver, the CEO of Digital Ribbon (described as an “eBay for CPU Cycles”) wants to raise $1.5 million on a pre-money valuation of $5 million. Widgeteer Khris Loux, CEO of JS-Kit, wants to raise a $5 million series A. Suzanne Xie, CEO of online closet site Weardrobe, is looking for $500,000 to $1 million in angel money.

If another CEO wants to refer one of these funding seekers to a VC he knows, an email can be generated through the site (but the referrer puts in his or her own email address to make it look genuine). To help fuel these connections, whenever members look at the profile page of a venture firm that another member wants to be introduced to, they will be prompted to look at the relevant pitch.

The theory is that a personal introduction can be the breakthrough an entrepreneur needs to get a VC’s attention. Automating this process fits in with Ressi’s belief that most startups need to do 30 pitches to get three serious offers.

Whether or not this will generate any referrals, at the very least CEOs can get some feedback from their peers on their pitches. The problem is that the pitches, at least the ones up right now, are a bit spare in their details. There is little background information on the companies other than what is in the one-paragraph pitch, no bio information on the CEOs, no slide decks, and no video presentations (cough, Elevator Pitches). That makes it difficult to recommend any startup based solely on the pitches. But those elements can certainly be added, and Ressi is exploring his options there.

If Ressi can create a community where CEOs can actually help each other get funded either through helpful advice or introductions (or, in the future—why not?—pooled capital), then CEOs will keep coming back to TheFunded. If the introductions and advice go nowhere, then they’ll stick to working their Rolodexes.

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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.

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Many of the ratings are still spare. Some VCs don’t have any, or only a couple. For instance, John Doerr at Kleiner Perkins (4.5 out of 5), only has two ratings, indicating that perhaps he is not as active as he once were (or that entrepreneurs are too scared to rate him, even anonymously). But for those who have at least three ratings, entrepreneurs can now compare them to the overall rating of their firm. It shouldn’t be any surprise that some of the big hitters in the VC world rate highly, like Sequoia Capital’s Michael Moritz (4.4 out of 5, versus 3.9 for Sequoia) or Roelof Botha (4.1). Dick Kramlich at New Enterprise Associates rates a 4.8, compared to 3.4 for his fund.

But every venture firm has some partners bringing down the average. For instance Mark Kvamme at Sequoia has an abysmal 2.9 rating, a full point below the firm’s average. Other notable VCs and their ratings (out of a maximum of 5):

Bill Tai, Charles River Ventures: 5.0
Joshua Kopelman, First Round Capital: 4.4
Fred Wilson, Union Square Ventures: 4.3
Tim Draper, Draper Fisher Jurvetson: 4.2
Steve Jurvetson, Draper Fisher Jurvetson: 3.0
John Hummer, Hummer Winblad Venture Partners: 1.2

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Despite the broader economic rumblings, it’ s never been cheaper to start a company and there’s still a ton of venture money out there. In fact, Ressi told me that there is so much money out there for startups that VCs are now offering to partially buy out founders’ personal stakes to get deals. In effect, they are paying off the founders to pick them. Below is some of his advice for entrepreneurs from his presentation that he just finished onstage:

The only time your lawyers will be honest with you in the venture raising process is when you interview them. After that don’t trust anything they say because their motivation is to close the deal and get the fee.

Everyone needs to go and pitch a VC first and expect it to fail. That first pitch will suck no matter what. Bring a business partner who is silent. Have him or her watch the interaction. Every time the VC falls asleep or makes a derogatory statement, your partner writes that down, and you go and fix it.

All you need is a PowerPoint. Make it 20 minutes. Do not throw in detailed financial statements. You are basically throwing a giant hunk of steak into a lion’s den and rolling around in it. Numbers is their business. They will tear you apart.

VCs talk amongst themselves. Most entrepreneurs fall into the classic mistake of pitching serially. There is no such thing as confidentiality. Your materials will be seen by dozens of VCs the second you pitch. It gets worse, if a VC likes you, they will tell the other VCs that you suck. You want to hit as many funds as you can,. I recommend trying to hit 30 funds in two weeks. Typically, you will get one term sheet per 10 pitches.

I guarantee you your first term sheet will be bad. They will lowball you, then they will pressure you to sign it quickly. Hold off. Your goal now is to get the second or third term sheet. Without other offers there is no market.

VCs say we will co-invest. They are trying to share the offer. Tell them, “No. Why don’t you make me an offer? I will evaluate the offer separately.” Do not let them syndicate the deal or merge the term sheets.

There is no confidentiality. Everything you send out will be seen by your competitors.

Some good advice. If readers have more to add, please tell us in comments.

(Photo by Ernst-Jan).

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Now VCs are fighting back. Someone has launched TheUnFunded, a site that works very much like TheFunded but let’s VCs share their opinions of the entrepreneurs they meet with. The site will officially launch tomorrow (4/1), but it’s live now:

Inspired by TheFunded.com’s ability to allow entrepreneurs to anonymously rate VC firms, we thought it was only fair that investors also be able to anonymously rate startups and entrepreneurs. So we decided to launch TheUnfunded to do just that.

Only investors that can prove their identity will be allowed to join TheUnfunded, where they can anonymously provide feedback on the startups that they’ve met with along a five point scale. The fund raising process is indeed a long, difficult one. From an investors perspective there was just no way to tell how much an entrepreneurs well-crafted story matched the reality of their business. Until now.

The VC behind the site reached out to me to tell me about it, but asked to remain anonymous for now. There’s already entertaining content on the site, though:

The founder arrived 10 minutes late — and began the meeting by telling me that he just came from Sequioa (yeah, right). He then proceeded to state (five times) that his company was the next Facebook.

Wow – this guy was clueless. He started his slide deck and went on autopilot. I think he spoke for 18 minutes straight without even looking to see if I was awake. But worse than his pitching skills is his knowledge of his industry and competitors. I named four competitive companies that he never heard of.

The founder arrived on time and hit on my receptionist. My assistant came to bring him back to the board room, and the founder hit on my assistant.

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But now they’re really going to be angry – the site is encouraging users to upload term sheets so that people can compare and contrast individual terms from each VC.

Venture capitalists have a lot of leverage negotiating terms that help them increase ROI simply because they have a firm grasp of the market. Things like liquidity preference (how much money they get out before the founders in a sale), veto rights and other preferred stock privileges can affect the long term economics of a deal substantially.

Entrepreneurs generally rely on their attorney and contacts to help them understand the current trends in terms. Now, though, TheFunded will help them by supplying even more information. Entrepreneurs will love this. VCs, not so much.

One catch, though. Entrepreneurs must upload their own term sheets before they can view others. The goal is to encourage participation, not just data downloads.

TheFunded was run anonymously until Adeo Ressi announced that he was behind it in November.

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Staying anonymous was probably smart, since more than a few VC’s have been miffed at all the negative feedback they’ve received from startups who’ve pitched them.

But tonight the group says they’ll be announcing themselves at an event at Stanford. The exact time of the announcement? 6:45 pm.

Clearly Jason Calacanis and Philip Kaplan are either part of it or know who is. Both are now at Stanford, and neither will take my calls.

Both Calacanis and Kaplan are currently at Sequoia-backed startups, by the way. Calacanis at Mahalo, Kapan at Adbrite.

As it’s announced, we’ll update.

Update: The man, “Ted”, behind “The Funded” is Adeo Ressi. Ressi founded and sold casual gaming site Game Trust to RealNetworks this September for around $20 million. He also serves on the board of the X Prize Foundation, best known by their cash prize for civilian space exploration. He was apparently screwed by a number of VCs in the past, which gave him the idea for the site.

Update 2: Apparently Wired was pre-briefed, has a picture and lots of background.

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We’ve covered a few companies that are roughly in this space – see BossBitching, Ovehear.us and JobVent. For entrepreneurs who want to rip into venture capitalists that have turned them down, TheFunded is always entertaining. None of these hold a candle to what FuckedCompany was back in the day, but it’ll take a major downturn before that type of site can see the glory days again.

Wurkpal is based in San Jose and says they’ve received angel funding.

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Until now, membership was restricted. You have to be invited by another member, and you have to prove your identity as an entrepreneur by linking to a bio page or other evidence.

There are some really ugly comments on the site. Funds that have been trashed include Foundation Capital (”hot receptionist only thing of value”), Motorola Ventures (”if this were a good idea, we’d be doing it already”) and ComVentures (”a few bright sparks in a high-school locker room of uber-jocks”).

At least a few venture capitalists don’t enjoy having their flaws exposed on the site. One VC, Howard Hartenbaum, became incensed after comments said he was “rude, arrogant, slow and vomit-inducing”. Matt Marshall wrote about the incident and said TheFunded was “turning out to be a useless site.”

Well, controversy sells. Hartenbaum reportedly started asking companies that pitched him to write their feedback about him on the site. Since the date of Marshall’s post, ten new comments have come in about him, all extra-positive. Prior to that there were just four comments, half positive and half negative (the two negative comments are to the left).

Now, TheFunded says they are letting VCs participate directly in the discussion. They can write an overview of the fund and it’s partners and give other information entrepreneurs might find useful. VCs interested in building out their profile should start here. The page offers to let you “set the record straight.”

It’s not clear if this will be enough to assuage the angriest VCs, who don’t like to see their behavior reported to the world. But that may not matter for TheFunded. The more content that appears on the site the better, and if it’s controversial that will create even more attention for the young startup.

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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.

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