How relevant is TheFunded?
It’s been a long time since I’ve posted here, but I was thinking earlier this morning about VC transparency and some of the mechanisms that have emerged to allow greater insight into the fund raising process. One of the more interesting to emerge last year was TheFunded, which purports to be the entrepreneur’s greatest source of founder-generated information and comparative reviews of different venture firms. It’s an interesting premise – take an inherently opaque and one-off universe of information, aggregate it, only let in those who are aligned with the reviewers, and close some of the gaps in founder understanding. Collective bargaining by entrepreneurs.
A couple of problems, all of which have been pointed out: As is often the case with review sites, those motivated to post are usually those who have had either very good (“they funded my company!”) or very bad (“the turned me down … bastards!”) experiences, leading to some concern about the quality of the data in the system. In addition, some funds have turned around and begun to incent founders to enter data into the system that may be of a biased nature. But nonetheless an interesting idea.
Here’s what I noticed, though, as I was poking around the (public portion of the) site this morning: People don’t really seem to be using it. I’ve worked at two funds over the past couple of years as I’ve finished my MBA at Columbia, RRE Ventures and Updata Partners. Both are well-received on the site, but in both cases the most recent data is months old. RRE’s most recent review was December 19 of last year (two and a half months is a long time in this world). Updata’s last review was October 11 of last year (four and a half months, well… yeah). Both funds are actively investing and have met with dozens, if not hundreds of companies over the intervening time period.
So the question becomes, are founders ignoring the site because once they are already far along enough in the process to be of value as posters, they no longer see the value proposition it offers, or for other reasons? Either way, it was supposed to revolutionize the venture world, and to date, I don’t see that happening. In fact, I think the VCs may have beaten them to the punch.
Tags: Entrepreneurship, thefunded, venture capital
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March 2, 2008 at 9:58 pm
Your point about very good and very bad experiences motivating content is accurate. However, your point about usage is incorrect. Over 70% of the site content is reserved for Members-only. Most dialogue on the site occurs in Feedback, so many Members comment on an existing post rather than authoring a new one, especially if they vehemently agree or disagree with the post. Many posts have over two dozen pieces of Member Feedback, especially controversial ones. Just an FYI.
March 2, 2008 at 10:25 pm
To “Founding Member”, who I assume is the man formerly known as Ted, I would ask this, then: If your claim that usage is healthy but in a way seemingly unintended by the site’s design, isn’t this use patten in a large sense rendering the sight far less valuable? If I’m an entrepreneur, it’s sub-optimal for me to have to dig into the comments of previous posts to find new data or opinions. In addition, aren’t the rating features of the site undermined by people simply tacking their views into existing discussions?
I remain agnostic about whether or not usage is indeed heavy given my earlier comments and the anecdotal evidence I’ve seen here in New York, but the post wasn’t meant to conclude that TheFunded is not useful or relevant, but rather was meant to be thought-provoking based on what I see happening.
Appreciate the comment.
March 3, 2008 at 12:45 am
The usage is 100% in-line with the sites design. The majority of content now contributed by Members, which include (1) uploaded term sheets, (2) Feedback and discussion points, and (3) specific partner reviews at venture funds, are hidden from public view. Why is this the case? Comfort and confidentiality.
In the worst cases, Members have literally been threatened and harassed by venture capitalists when posts have been traced back to them. The goal of the site is to help entrepreneurs work with good venture capitalists, not to inform the whole world of the good and bad practices of venture capital. The Members, mostly all CEOs, have chosen the tools for communication to ensure that the broader community of executives and venture capitalists have no idea what is being said.
Ironically, a re-design is underway for March that will expose some of the “behind-the-scenes” activity, showing Feedback counts and when new discussion items are posted or term sheets uploaded. Still, most data will remain behind-the-scenes.