thefundedThere is no ignoring TheFunded anymore – it has become the place for entrepreneurs to trade stories of their experiences with Venture Capital firms, causing many a ruffled feather in the investor community where people are not very appreciative about being criticized publicly.

We wrote about TheFunded in an earlier post. In the few short months that the startup has been around, they have managed to stir up a fair amount of controversy. Recently the site opened itself up to VCs. Venture Funds can now maintain a presence on TheFunded. They can create profiles and provide other information for entrepreneurs. But they cannot contribute to, or influence what is written about them on the site. Not directly anyway.

So many funds are rushing to set up shop on the funded. It is sort of like being on Second Life – its not that you will necessarily sell more widgets by being on the site, but its just that you need to have a booth there because everyone else in your neighborhood has one.

The site can be a good resource for entrepreneurs, but for VCs it is not all good. Comments on the site can be anonymous so there is nothing to stop someone, who got turned down for funding to really say what’s on their mind.

There is room for manipulating the system right now, as some smaller funds have risen to the top of the leader board (on the home page) with just one review. TheFunded needs to have get an algorithm in place where the order that the sites show up in on the front page is weighted by the number of reviews as well as the average ratings. Otherwise I see some large funds sinking to the bottom because of a few disgruntled customers. Many VCs have gotten proactive about getting their portfolio companies to weigh in.

The interesting conundrum that I see is the revenue model for such a site. Clearly this is not an “eyeball” generated model – this is a popular, but niche, site with startups as its main consumers. I can’t see many entrepreneurs, who are already stapped for cash, wanting to support a subscription model. And accepting any kind of sponsorship from investors would get in the way of impartiality.

On the home page, there are pointers to business news sources which have reviewed the site, such as TechCrunch, RedHerring, theDeal and Business 2.0. Maybe one of them would take more of an interest in the near future…

It will be interesting to see if TheFunded decides to go the venture funding route themselves. They have all the information they need to make the choice, for sure!

May 16th, 2007 Posted by Toni DasGupta | Software, New Media, Startup | one comment

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