Why do VCs blog (and Tweet)?

(Editor’s note: Jeff Bussgang is a General Partner at Flybridge Capital Partners. This column originally appeared on his blog Seeing Both Sides.)

For decades, the venture capital industry was like a Yale Secret Society – very clubby, discrete and opaque.  VCs had all the power in the VC-entrepreneur equation – and entrepreneurs had to work hard to decode the mysterious VC process to obtain funding.

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My, how the world has changed in a few short years.

Pundits will tell you that in terms of trends, 2009 was the year of the real-time Web/Twitter, smart phones/iPhone and the mainstream emergence of digital advertising.  But 2009 was also the year VC-run blogs and Tweets really became mainstream.

Today, over 100 VCs blog regularly (including all five of the Flybridge general partners!). One blogroll puts the number at 129 VC bloggers. That’s 10-15 percent of the active VC population of 1000.

Here’s how I get that number:  Tthe National Venture Capital Association says there were 882 firms in existence in 2008, but with many firms no longer investing new money, I would estimate that approximately 400-500 firms are truly active.  With an average of 2-3 senior investors per firm, there are therefore probably 1,000 VCs that are actively seeking deals and sitting on boards.

The two gut checks on that are:  (1) 1,500 new deals get done each year and 1.5 deals per senior VC is the right average and (2) On a bottoms up, geographic basis, there are maybe 500-600 in CA, 100 each in Boston and NY (maybe a bit more in Boston and a bit less in NY), 200-300 elsewhere in the US.

So 10-15 percent of our entire industry blogs.  And nearly all of the VC bloggers tweet as well.  Think about how extraordinary that is.  Imagine if 50 of the members of congress blogged and tweeted regularly.  Or if 50-75 of the Fortune 500 CEOs.  Or 40-60 of the 400 NBA players.

The amount of transparency and richness of information available to entrepreneurs about the VC world is unprecendented.  This is surely leading to more efficient markets in what many call the most inefficient market of all – the dance of small businesses seeking capital.

When I first started blogging five years ago (inspired by David Hornik, who started VentureBlog in 2003!), I got some funny looks from my peers.

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At the time, the thought of VCs revealing our inside secrets and investment strategies was ridiculed. Further, VCs were supposed to be too busy to blog, so the best VCs wouldn’t do it as it would take away from their work looking for great deals and managing their portfolio.  (Tell that to VC bloggers like David Cowan, Brad Feld, Fred Wilson and other VCs who have 15 year plus great track records.)

So why do VCs blog (and tweet) with such frequency?  I can’t speak for all 129, but here’s why I do it:

1) I love to write. Simply put, I enjoy words, language and the challenge of expression and composition.

2) Creative expression. As a VC, I can’t exert my creativity in the same way that I did when I was an entrepreneur.  My blog is a productive, yet harmless, outlet to express my creativity.

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3) Educational. There’s an old adage that if you truly want to learn something, teach it to someone else. Forcing myself to explain the VC business to entrepreneurs through my blog has pushed my own thinking and required me to study issues more deeply than I might otherwise have done.

4) Transparency. The VC business can be an intimidating business to many.  I am an iconoclast at heart.  As a former entrepreneur, I particularly enjoy breaking down barriers and making the VC business more accessible and transparent for others.

Will more than half our industry blog and tweet five years from now?  Stay tuned.