I really like VCs. The good ones are worth their weight in gold, which they collect with my whole-hearted applause.
But the idea that the industry is “open”? Laughable. Which is why it’s wonderful that Bo Peabody of Greycroft authored an “OpenVC” thoughtpiece in TechCrunch, bringing up how everyone benefits from entrepreneurs knowing more about the VCs they approach. In my mind, however, his list is just table stakes. I can think of many more ways the industry can help promote the openness that will truly make for better matches, less wasted time, and better returns for the industry.
Let’s throw down the gauntlet. Here is what I feel is the bare bones for the public release of data and opinions.
*I would list all investments and firm involvements, including:
-lead partner on the investment, and whether or not a board seat is taken
-other team members (e.g., associates) actively involved in the account
-which rounds you invested in (so entrepreneurs can calculate follow-on
*I would list all returns from all funds, including open funds using latest marks-to-market
*All of my quarterly marks-to-market would be shared with an industry utility (NVCA?), which would collect all such marks from other “open” investors in the syndicate, then re-share a scatterplot of these marks with the entrepreneurs, the other members of the syndicate, and other interested parties. I would further pledge to adjust my mark to the median price, if lower than my own, for the calculation of any performance used either in promoting track records for raising funds or for calculating fees. I would subsequently allow my marks and their place in the scatter diagram available to various data providers and to my LPs.
*I would show a gauge on my website, showing the amount of dry gunpowder in each fund, and whether new investments were being considered for that fund or only reserves for follow-ons. (Note—Pitchbook and others are already making estimates of this: might as well show the real numbers.)
*My website would show a timeline showing each investment and its size, highlighting first time investments.
*Concurrent with the announcement of each new investment, I would publish a blogpost “Why I invested in XYZ”. I additionally to pledge to keep it up, even if the investment goes bad.
*I would clearly state my market theses, giving real granularity to the types of businesses the firm wants to consider.
This post definitely gets my juices going, and I’m going to followup later this week with Part II.
But meanwhile, anyone want to take the pledge? VCs, don’t just talk transparency, BE transparent. The most transparent will be the ones who generate the greatest goodwill and inbound traffic. Bo Knows.