Venture firm EDF moves to silence entrepreneur at TheFunded

August 12, 2008 | Matt Marshall | Comments | |

TheFunded, a site that lets entrepreneurs rate venture capitalists, continues to stir things up.

EDF Ventures, a mid-sized venture capital fund in Ann Arbor, Michigan which has been reviewed negatively by several people at the site, has subpoenaed some records from TheFunded in a court action the firm is taking against an entrepreneur who left a comment.

As you’ll see below, the anonymous entrepreneur said the firm’s members “are to be avoided unless you are desperate.”

The retaliation is apparently an attempt to silence the entrepreneur, a trend at TheFunded we’ve written about before.

Previously, we also reported about a cease and desist letter sent to TheFunded by a debt firm, Hercules, but under the Communications Decency Act, TheFunded’s site doesn’t have liability for the comments left by third-parties at the site, and Hercules dropped its demands. Something similar happened with a lawyer tried to sue Avvo, a site that lets people comment on lawyers. The lawyer failed in his efforts. Now we’re seeing EDF go directly after the entrepreneur, which is a first.

A copy of the subpoena is below. I’ve also included a screenshot of TheFunded’s review page about EDF, the firm that is taking the legal action, where you’ll see the offending comment at bottom. EDM is apparently the parent company of the fund.

In a statement, Adeo Ressi, chief executive of TheFunded, vowed the action would fail, because he doesn’t store records about the identity of commenters. He said this should help the site even more, because it will encourage entrepreneurs to come forward and leave more comments:

When TheFunded was conceived, we understood that some investors might attempt to take legal action against the views of entrepreneurs. In order to prevent this form of censorship, TheFunded has been carefully designed and takes extensive measures to protect the anonymity all those who share their opinions on the fundraising experience. TheFunded does not store IP addresses, email addresses, or any other personal information associated with a Member account in any database or any file system operated by the company.

For every CEO that shares an experience, there are nine others who are hesitant. The worst stories of investor abuse remain untold, and TheFunded hopes that this test of Member anonymity will help open up floodgate.

[Disclosure: VentureBeat has a business relationship with TheFunded, including links to each other's sites]


Next Story: Blizzard cuts deal with NetEase.com to take Starcraft II to China
Previous Story: Aquus joins the solar service crowd with first investment

Bookmark and Share

Tags:

Photo of Matt Marshall

About the Author, Matt Marshall

Matt Marshall is editor and CEO of VentureBeat. Follow him on Twitter at @mmarshall, and follow VentureBeat on Twitter at @venturebeat.

  • Although I'm in favor of more visibility into VC firms, I wonder about the real value of more "anonymous" ratings. Here's a thought experiment, if TF was all anonymous, would anyone care what was written? To me, opening the floodgates to anonymous ratings is a recipe for irrelevance.
  • edahan
    I am a longtime member of TF. Granted, a noticeable # of posts are personal rants, petty whining and irrelevant comments (kinda reminds me of a political campaign).

    BUT - the overwhelming majority ofdi posts on TF are objective, sincere and worthy of
    discussion.

    I take issue with Don Jones' comment about Anonymous = Irrelevant because of the uneven playing field of the VC and the Entrepreneur. Sooner or later, 99.9% of all seed / startup ventures will need funding. They will have advanced beyond the friends&family money and possibly even some outside angel-level money.

    Now, they have to visit the VC - a place where, enough times to make it a constant thought, the Entrepreneur genuflects while the VC pontificates.

    Now, they have to go to a funding presentation at a top tier VC only to have the EIR show up 1/2 hour late for the meeting; put his cowboy boots up on the conference room table; and start off by saying, "so tell me why I should be your CEO ?"

    I do not want this post to focus on this one instance - I do want to use this one instance as a real example of what happens - an awful lot.

    So, Don, before you equate Anonymous with Irrelevance, please understand the survival mode in which most entrepreneurs live and the stuff they have to put up with to get VC funding.
  • VC Watcher
    We've been involved the SV investment scene for 25 years now, and it has never been this bad when it comes to inappropriate behavior. The concept of investment as a hard-working profession is undermined by unscrupulous vindictive behavior. TF would not exist if the majority of VCs in the Valley followed well-established and successful investment processes, handled their meetings and communications succinctly and timely, disclosed conflicts-of-interest and handled legal / financial negotiations in a forthright manner. There are still good VCs out there, but as the lemmings rush to pursue me-too deals (urged on by ill-informed limited - what ever happened to "managing your managers"?), quality of deals is reduced, our industry suffers from lack of innovation, and the distrust between entrepreneurs and investment grows. The contempt of younger VCs towards anyone experienced (a form of envy spawned by a fundamental lack of confidence in their decisions) and the rampant theft of entire business models, IPR and even teams introduced in confidence in meetings by even established venture firms is unsupportable. The justifications I hear from partners at these firms is that "everybody else does it" and "there's always somebody else coming along". Sadly, our industry and our national security suffer the most from these decadent and immature rationalizations. The development and policing of an investment code of conduct, similar to that used by medical and legal professionals, is necessary to return investment to the once-proud profession that laid the groundwork for the innovative successes we take for granted today.
  • T. Ruth
    being that the signed material on TF is 99% obsequious BS, it would be a real nice outcome if this news inspired more anonymous VCtims to let it rip on TF's discussion boards.
  • Anonymous speech has its place, despite its often abuse, particularly when there is a large power differential. Politics come to mind, for example. At the same time, anonymous generally also means unsubstantiated, and is just a data point.

    As a reminder, just look to one's spam folder hints on what stocks to buy, and to whom in Nigeria to send your bank information for that long lost relative you never knew...
  • Pat
    Anonymous = honest.

    With no fear of retribution, you can say what you feel. Lets not forget the balance of power here as witnessed by this latest attack.
  • VeteranCEO
    The VCs have been doing this to entrepeneurs since Sand Hill Road was paved. They simply don't like a slightly more level playing field
  • FundedCEO
    I have used TheFunded to give honest and blunt feedback…some good, some bad. Now I am very worried that the VC firms that I gave honest (but negative) feedback on will come after me! I am not a ‘techie’ so all this stuff about security and anonymous identities on the web goes over my head. How likely is it that anything will come of this? Should I go back in and delete all (good and bad) of my comments on TheFunded’s site?
  • edhardy622
    UGGs became ubiquitous among Southern California surfers and Southern California downhill skiers, and from there, Uggs, which name comes from the Australian
    http://www.uggboots365.co.uk
  • cfhfh

    There is nothing that touches these for just lazing around at home. Bar sleeping I don’t take mine off now that its getting colder, they are not quite as stiff as they were when they first arrived but still extremely comfortable. It would be nice if they had a little more arch support but other than that I’m very pleased. I am finding a nice ugg boots on sale!