(AFP) – Feb 17, 2008
SAN FRANCISCO (AFP) — An entrepreneur has turned the tables on venture capitalists by creating TheFunded, an online community where heads of start-ups expose devils and saviors in the world of moneyed investors.
Adeo Ressi founded the unprecedented online forum in March of last year to show entrepreneurs how to swim among financial sharks and not be devoured.
He is so wary of powerful venture capitalists that he remained anonymous until last month.
"The entrepreneur basically walks into a wolf's den as a lamb," Ressi told AFP. "We are going to change that."
TheFunded lets start-up chief executives rate venture capitalists and share stories of dealings with them.
The website reveals complaints of venture capitalists being arrogant, duplicitous, and even possibly stealing ideas.
One venture capital firm is described as "smart, but dangerous ... Don't get sideways with these guys or the tires of the bus they throw you under will hurt."
There are stories of investors changing terms in final moments or ousting founders in order to sell firms for fast profits.
"I think TheFunded is a good source of anecdotal data that helps inexperienced entrepreneurs learn a little bit about how the Silicon Valley works," Morgenthaler Ventures general partner Drew Lanza told AFP.
"But I would caution that the plural of anecdote is not data, and young entrepreneurs should take what they read on the site with a grain of salt."
Ressi vets each member to make certain they head companies and then erases identifying information so they are anonymous on the website.
TheFunded boasts nearly 6,000 chief executives from around the world.
"These people are pouring their hearts out with fairly detailed tales of good treatment and bad treatment," Ressi said.
TheFunded can be a "healthy and constructive" resource, as long as people consider that entrepreneurs can react emotionally to rejection, said Allegis Capital founder Bob Ackerman, a former entrepreneur.
"Entrepreneurs' companies are their babies," said Ackerman, a spokesman for the National Venture Capital Association. "When you tell someone their baby is ugly, it gets personal."
Weeks ago, TheFunded added an arena for posting financial details of venture capital deals. The forum reveals terms "all over the map," according to Ressi.
This month TheFunded will begin letting entrepreneurs pitch ideas to chief executives that have funding. Financed executives can then recommend worthy pitches to their investors.
"TheFunded, at the end of the day, gives anyone with a vision the ability to bring it to market," Ressi said.
Ressi is a hero in the eyes of entrepreneurs such as Tom Faust, who is struggling to raise funding for his Redwood Renewables start-up that makes solar-power generating roof tiles.
"Adeo is a saint to entrepreneurs," Faust said.
"You see patterns in how venture capitalists respond like old dogs that don't learn new tricks."
Human Global Media founder Brady Brim-DeForest, who is on his fourth start-up, credits TheFunded with shining light on how venture capitalists do business.
"They are now more accountable for how they do business," Brim-DeForest said. "We've created a sense of community and leveled the playing field a little bit."
Venture capitalists complain that anonymous comments lack authority and that they can't post responses on the website.
"It is really just a group vent," said Storm Ventures managing member Sanjay Subhedar. "It gives a one-sided view and there is no chance to rebut."
Subhedar defends the VC community, saying there are natural checks and balances in place to keep deals fair. He sees TheFunded as useful to "newbie or novice" entrepreneurs.
Lanza said he favors illuminating how Silicon Valley operates but has reservations about unbridled anonymous trashing of venture capitalists.
"To some extent, TheFunded is part of a culture that rewards gossip and tolerates anonymous attacks on individuals, and I regret the coarsening of our society in general," Lanza said.
"If I turn the channel on my TV and run across one more reality show I'm going to throw the damn box out the window."
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