Are VCs & Angels Being Too Transparent?

A couple of months ago I started following some Venture Capitalists and Angel Investors on Twitter and reading some of their blog posts. It wasn’t a top priority for me in the past because I didn’t need any startup funds. When we started working on Noot I decided that it was probably a good idea to do my research, and what better way than reading what they have to say.

I have been pleasantly surprised at how open many Investors are in sharing their thoughts and methodologies to anyone that wants to listen, most importantly to entrepreneurs starting out. Their blog posts are mostly insightful and the comments on them lend to great fodder and feedback from the community. The good ones provide extensive information on the kinds of companies they like to invest in and the even better ones constantly have entrepreneurs singing their praises. Based on this information I have made a list of both VCs and Angels that I want to talk to about Noot.

Recently there has been a lot of drama in the world of VCs and Angels. The current soap opera circulating the Intertubes is AngelGate. Micah Baldwin summarizes what Angel Gate is quite well. I’m sure this isn’t the first time something that has set off alarm bells has happened, but now that so many of them are opening up publicly in 140 characters or less, the community is much more aware of it. I suppose I always thought of that world as the grown up table. They are smart and insightful and very professional. They have played huge parts in growing so many of the most successful businesses of the Internet generation and should be revered. Many entrepreneurs come to these people with their hearts and souls and livelihood in their hands. Many rely on them for their experience to make their venture successful. Some might be taking a huge risk and putting the welfare of their families on the line and expect the best of these experts.

If you are new to this world like me, charting the waters is difficult. Unfortunately for them, but fortunately for us, the Internet is their worst enemy. I think that some of them are treating their “status” as a popularity contest and spouting off things that make them come across unprofessional and even worse, untrustworthy. Great, those are the people that get a red flag.

I commented on the post “Collusion” that Fred Wilson made in response to the AngelGate allegations by Michael Arrington and said “I think one difference from 10 years ago is that I wouldn’t have heard about this as quickly, and it would have come second hand as opposed to tweets & blog posts from the people involved.” That’s at least a good thing. I don’t have to rely on other’s opinions to determine the character of people that I am going to turn over a part of my great idea and hard work to. And that’s an important point. Remember that it’s not just about raising money in order to grow your business, you absolutely must want to invite people in that you want to work with. I understand that desperate times call for desperate measures, but do yourself a favor and don’t jump at the first dollar bill thrown at you. There might be a case where the person or company is not a great fit and it will just turn into one unpleasant day after another. In the case of Noot, we will only work with people that want to be involved because they have expertise to bring to the table such as a passion for sports, video games, or mobile technology.

I was chatting to a friend about AngelGate, and I said that I really liked what Ron Conway had to say in his letter that was leaked (purposefully or not). My friend responded, “He hits on one reason I left SV, in addition to tech folks being guided and blinded by the VC veil of greed and bullshit. Its almost more exploitive than Hollywood, the music biz, and sports combined. A bunch of nerds trying to be cool and they think money will bring all that is important in life.”

At first I thought that some of these VCs and Angels need to take their tweets and blog posts down a notch and be less transparent in order to maintain their integrity, we’re all human and sometimes say stupid things. Then I thought about it some more and want them to continue, because like I said before, it is to the benefit of the entrepreneur that they put all their cards on the table.

You might be wondering who I have given red flags to, but it doesn’t matter, because I have my own criteria for what caused me to raise it, and so should you. Additionally, even if you are a take-no-shit entrepreneur, you can still maintain a high level of professionalism. And who knows, maybe some of these folks will get out from under the bus they put themselves under.

Whether or not you agree with what I’m saying, if you are an entrepreneur looking at raising money or getting advice from someone about your business, do your homework and only work with people that you think have integrity, are trustworthy, and share the same values as you. It’s OK to disagree from time to time, that’s healthy and important, but it’s how you will work together and how they will support and represent your dream that is key.

Here’s some lists of Angels and VCs on Twitter that I follow. You can learn a lot from their tweets and they usually post links to their blog posts:
http://twitter.com/angellist/angels
http://www.venturearchetypes.com/List_of_VCs_on_Twitter.html
http://venturemaven.com/

-Tara

http://enjoymentland.com/ Buster Benson

Well said, Tara. While I think it’s doubtful that the egos of tech are any more inflated than the egos of any other industry (they just happen to be closer), I think it’s good to get them checked every once in a while. Whether or not the accusations are true, I don’t think anyone on either side of this public drama can be said to have a small ego. It’s just a power dynamic getting shaken up a little. One tribe trying to make a move against another. And I think most of the people are actually good and trying to do the best thing, in a field where it is expected that self-interests are particularly motivating.

It does make this whole beginning interest of possibly raising money a little more exciting, though, right?
http://tarathetiger.com Tara Tiger Brown

Yes, there are definitely egos every where, but I guess it seems more natural to me that a starlet or a music icon would have a big head as opposed to a professional businessperson.

Not only does raising money become more interesting, but it really forces you to pay much closer attention. The days when you would take any record deal just to get on the radio, are over.
Sam

I think that your conclusion is exactly right. If you’re going to take money, take it from someone you can (literally) live with. Now, just a guess, but I suspect you’ve red flagged people who have not written a check in years but continue to solicit pitches. ;} BTW, check out thefunded.com, if you haven’t already. If you have some friends who are members, especially on both sides, then you can sit with them to have a real good look before you create an account there. Very interesting. Good luck if you decide to do a raise. May you never need it!

Are VCs & Angels Being Too Transparent?

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