Should you be paranoid about your VCs?

There’s an interesting story in the Boston Globe yesterday about the founder of Silicon Valley online travel start-up SideStep, and how he had several meetings with an East Coast venture firm that ended up funding a competitor.

The Boston venture capital firm, General Catalyst, apparently never disclosed to SideStep founder and CEO Brian Barth that it was considering investing in Kayak, a move they announced a month after their last conversation with Barth (and so, most likely knew about the deal at the time of their conversations with Barth, because it usually takes at least a month to get from first meeting to deal-announcement stage).

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We found the response from the VCs in this story noteworthy. Nowhere did they come close to saying that, yes, perhaps they should have disclosed the fact they were looking at Kayak. True, there’s nothing illegal in not being aboveboard in this case. But your reputation will spread, and for VCs, that’s everything these days. Still, as Mike at Techdirt points out, that’s part of the game, and start-up entrepreneurs need to realize that.