TheFunded, the controversial website that lets entrepreneurs rate venture capitalists, has rolled out a new feature that lets entrepreneurs pitch venture capitalists with help from their friends.

Called TheFunded Connect, the new feature, to be unveiled tomorrow, lets entrepreneurs solicit help from their fellow entrepreneurs to refer them to venture capitalists. Entrepreneurs wanting funding fill out a form, and then entrepreneur friends can look at the pitch and decide whether to recommend the company to contacts they might have among different venture firms.

At bottom is a screenshot showing how it works. The company called Weardrobe, run by chief executive Suzanne Xie, pitches itself using a simple form. Underneath you’ll see the forms filled out by a friend of Suzanne, pitching a VC on her behalf. You’ll see that Xie also has a way to let her friends know know who she wants to reach.

A video tour is embedded at bottom.

I contacted David Stern, a venture capitalist at Clearstone who checked out a test version of the feature, after someone referred a company to him.

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Stern was critical of the service. While anything that makes referrals more efficient is a good thing, he said, he questioned whether any high-quality CEOs would use the service. Most good CEOs have their friends simply pick up the phone and call him directly. “If it’s putting up all its info at TheFunded, what does it really say about the company?” asked Stern. “You have to question the quality of the company.” However, he said some companies have very few contacts, so the service provides some value by giving them some exposure.

LinkedIn, which lets people contact each other more confidentially, is more effective for such communications, he said.

While Stern dissed this latest feature, he said TheFunded had wrought “powerful” change on the VC industry since the launch of its main offering. “It made us question whether we’re behaving the right way,” he said.

[Update: I just talked with Roelof Botha of Sequoia Capital, who differed somewhat from Stern, saying that he finds the service useful. Botha says it’s one more way to get referrals that is much more efficient than getting email pitches from people he doesn’t know.]

Founder Adeo Ressi countered the critique, saying the site is closed to the public (it is only open to entrepreneurs) and so the pitches are still being made in an intimate setting. Moreover, it gives entrepreneurs a more structured way of calling upon their friends to make the pitches. He said that similar offerings in the market, such as Open Deals and Raise Capital, charge entrepreneurs a fee to post their pitches. [Update: Actually, this isn’t true. Raise Capital does not charge a fee for entrepreneurs to post pitches. It only charges for things like home page placement. More info here. <!– /* Font Definitions */ @font-face {font-family:”Cambria Math”; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:1; mso-generic-font-family:roman; mso-font-format:other; mso-font-pitch:variable; mso-font-signature:0 0 0 0 0 0;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-1610611985 1073750139 0 0 159 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:””; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”,”serif”; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; color:black;} a:link, span.MsoHyperlink {mso-style-noshow:yes; mso-style-priority:99; color:blue; text-decoration:underline; text-underline:single;} a:visited, span.MsoHyperlinkFollowed {mso-style-noshow:yes; mso-style-priority:99; color:purple; mso-themecolor:followedhyperlink; text-decoration:underline; text-underline:single;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-size:10.0pt; mso-ansi-font-size:10.0pt; mso-bidi-font-size:10.0pt;} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} –>] Other sites, such as Vator.tv and TechCrunch, which also allow entrepreneurs to submit video pitches openly to the world, can be considered entertainment, Ressi said. Investors are unlikely to look for deals at those sites, because they are busy and prefer to rely on trusted referrals, he said.

Ressi is launching the service with five companies, which he says represent a quality bar high enough to draw interest from investors during testing. He’s hoping these companies will get funding within several months, which he said will help prove the viability of the service.

Bottom line, it’s hard to see how high-quality companies will use this service to get funding. Good companies with contacts will probably do it the old-fashioned way: The phone call.

Disclosure: VentureBeat has a business relationship with TheFunded, including linking to each other’s sites.

<img src="http://venturebeat.com/wp-content/uploads/2008/06/tf-pitch-form.jpg"
TheFunded Connect from Adeo Ressi on Vimeo.