BioWorld Today Columnist
As we head out of the annual summer funding doldrums, hoping for better times ahead, my attention was caught by an entertaining article in the Wall Street Journal entitled "Web Site Puts the 'Vent' Into Venture Capital."
It seems that some smart folks have realized that there is value and - let's face it - fun to be had in letting entrepreneurs rant about the VCs from whom they try to extract funds.
I went to www.TheFunded.com to check it out and had a great time cruising around. The site provides ratings of U.S. and international venture funds, based on track record, operating competency, pitching efficiency, favorable deal terms and execution assistance, on a 1-5 scale.
The ratings come from a screened membership - you must be a current or former entrepreneur or CEO. Those members took the opportunity to vent about funds, while showing their focus on objective issues: records of successful exits, performance as board members, ability to help in a crisis and how partners treat the team.
It was pretty interesting to see how some of the well-known, and not-so-well-known, funds in our sector were rated. Many of our biotech funds had no rating at all. Many of the diversified funds probably were being rated by folks in other sectors. But the basic personalities and skill base of the firms came through.
CMEA got the top marks of firms that play in our industry, hitting 4.9 out of 5. Many biotech funds were listed but had not been rated as yet. So don't be discouraged if your firm is not listed in Table 1 (below).
While I am sure that there are all kinds of rationales for why those ratings are fair/unfair, it's an interesting starting point for new entrepreneurs to start prioritizing where to send their business plans, based on clear performance points that will make a difference to their financing.
Ms. Manners Would Be Shocked!
But really, the best part was reading the comments left by the entrepreneurs. After spending the past 21 years working with young firms and venture funds, I have seen some of the best and the worst on both sides of the table. However, the power equation gives more clout to the venture folks, so I am happy to see a mechanism for leveling the field even just a little bit.
While I am sure that some of the more interesting insights are to be found in the private, members-only segment of the site, cranky commentators were pretty clear about their experiences with the funds.
Founders were urged to avoid certain funds:
"These 'nice guys' are just spreadsheet jockeys devoid of vision . . . they are worrywart followers, not strong leaders with a slow-as-molasses decision-making process. These are the most anti-Silicon Valley types in the valley."
"They are focusing too much on eliminating any possible risk rather than to balance the associated risk against the market opportunity. After all, it is venture capital we are talking about here, not a bank loan."
And the scary warning: "If asked to send your slides in without a meeting, refuse. Often they meet with people with no intention of investing - it's called market research."
Entrepreneurs can get an early warning about which VCs exceed even that industry's expected quotient of rudeness:
"Met this guy at a conference a few years ago. He just walked over to our booth and basically told us how stupid we were. He told us we were idiots before he even asked a single question."
"Was set to meet with a managing director. When we arrived, she was in another meeting. We waited for 30 minutes until they sent in an associate who didn't know about our space. Finally, after another 30 minutes, another associate came in to tell us the MD couldn't come in."
"Forced to give the same overview to a revolving door of partners who asked the same questions repeatedly."
"They reached out to us and invited us to come in and pitch. In each of three meetings in SF, they were either late or didn't show up at all, were rude and constantly interrupted our presentations, and just flat out had no respect for our industry expertise or our time. We finally killed the due diligence because we couldn't imagine any of these guys as productive board members should they actually invest."
"Rushed us through the technical side of the presentation, as he 'knew all about it' and 'I am an M.D., you know'. It comes to pass that he is totally confused as how the device actually works. His follow-up diligence consisted of badmouthing the management team."
It's all about the partner
Just as having the right professor as your graduate advisor - not just being at a great school - is crucial, having the right partner within a specific fund is crucial. The site abounded with kudos and warnings about specific partners at funds.
For those wondering what actions rated positive comments, here are some of the kind words. It wasn't simply that the partners gave the entrepreneurs the capital they wanted, but rather they were a source of intelligent, thoughtful commentary on the proposed plan and were willing to share their network - regardless of whether they invested or not:
"May just be the best venture firm I've ever worked with. Smart, collaborative, and clearly committed to building each business, not just their portfolio."
"He was dead-on with his on-the-spot analysis of how best to grow my business."
"The wealth of operational experience and networking resources provided are invaluable for a start-up."
"I have had several meetings with Ms. A over the years and have developed a respect for her insightful questions, her feedback and candor in terms of next steps, and honesty for the reasons behind decisions when it was not to proceed."
"Clean term-sheets, good business logic and strategic/big-picture thinkers."
"We were turned down, we were told why, and the door was left open as we progress. This was all done in a respectful, professional manner."
So come on, biotech entrepreneurs! Make your voices heard! Head on over to TheFunded.com and share your experiences, good and bad. Maybe we can get BioWorld to co-sponsor an annual "Best Biotech VC Fund" award.
Robbins-Roth, PhD, founding partner of BioVenture Consultants, can be reached at firstname.lastname@example.org. Her opinions do not necessarily reflect those of BioWorld Today.