The dirty little secrets about VCs, at TheFunded

TheFunded is a Web site that rates venture capitalists, giving entrepreneurs more information about whether or not to take money from a particular VC

This is a very useful service to have, because the venture process is still secretive, and there is little public and objective review information about venture capital firms and their partners.

TheFunded, which we first saw mentioned on Techcrunch, lets its “members” rate a venture firm (using a scale of 0 to 5) on each of the following criteria: its track record, operating competence, pitching efficiency, favorable deal terms, and execution assistance.

Notably, you have to become member to submit ratings and leave comments, and you can’t be a member if you are partner or an agent of a firm. Also, you can only become a member if you are invited by another member or somehow convince TheFunded that you should be a member.

It is early days: It only has 23 reviews by 45 members, meaning reviews are highly subjective because each firm will only have few people passing judgment. Another, related drawback is that an entrepreneur’s experience with a venture firm is highly subjective, precisely because the entrepreneur either had a good outcome or a bad outcome while pitching the company. If an entrepreneur is rejected by a firm, he has great incentive to write in a bad review, particularly if his identity is shielded. TheFunded could try to find a way of disclosing whether the entrepreneur was rejected by the firm — but this is tough because rejection itself is difficult to document (it is usually oral, and so a pissed-off entrepreneur would have the incentive to say he wasn’t rejected).

Significantly, TheFunded was started by an entrepreneur who says he was really “burned” by a VC firm.

Further, if someone has not gone through the pitching process with a firm, they will not know enough, which discounts them too.

While registering, you have to disclose what company you are with, and submit a bio page. These are good steps, because this acts as a filter to avoid flaming criticism without justification (presumably, TheFunded can step in and remove a useless, spiteful comment providing otherwise little information).

TheFunded has a profile page for each firm (see Sequoia’s here, for example), listing their ratings, key information about the firm such as size of its fund, partner names, and even contact information for these partners (again, you have to be a member to get this information). The site has 16,559 contacts from 3,529 firms.

If you’re not a member, you can see only the first few lines of the comments. To see the full comments, you need to become a member.

We don’t know who is behind this, but we’re interested in finding out.