TheFunded, a site that lets entrepreneurs rate and comment about venture capitalists, has drawn a lot of attention from folks eager to learn salacious gossip about bad venture capitalists.

Over recent months, though, there’s been an odd development: Certain posts by entrepreneurs critical of VCs are being quietly removed and then replaced with more favorable comments. On its face, it looks like a whitewash. Or maybe it’s not so troubling. You decide.

The changes are notable because TheFunded has been struggling with how to handle entrepreneurs who post sour grape, inaccurate — and often viciously negative — posts about venture capitalists who rejected their ideas. Is TheFunded now assisting VCs in taking down these posts?

TheFunded’s founder, Adeo Ressi, says not at all. Rather, some of the posts are being removed under duress from venture firms — with threats of litigation. “ is surprised to learn that venture firms are spending money entrusted to them by their own investors to silence the opinions and constructive criticism of legitimate founders and CEOs,” he wrote in a statement.

My own conclusion after parsing through the examples is that there are always two sides to the story. My problem is that I wasn’t able to get through to any of the founders (they declined to return phone calls and e-mails), and so it’s hard to know for sure. But the truth is, stories are disappearing at a rapid rate. There are up to a dozen examples, including incidents at firms such as Dolphin Equity, GreenHills, Matrix, Greycroft and Steamboat Ventures (backed to Disney).

Take, for example, the post by an entrepreneur named Allan Levy on March 12 about New York private equity firm Dolphin Equity Partners. “Very dangerous fund,” Levy started. Dolphin partner Rich Brekka came on the board of his company, SilverCarrot, forced Levy out and “crammed” an investment into it to keep it alive long enough so that Brekka could successfully raise another fund, Levy explained. Levy claimed Brekka was having trouble raising the fund and that his partners were defecting.

Suddenly, though, Levy retracted it, under threat of legal litigation, leaving behind it only a favorable post by the new CEO Dorothy Young, which praised Brekka, summarizing how helpful he was with advice and introductions. “I highly recommend working with Dolphin,” she says.

Something similar happened with a post about the New York firm GreenHills Venture. An entrepreneur Michael Linderman wrote that he’d paid $15,000 upfront to the firm for introductions to potential investors, but that the firm had collected the money, prepared an ugly Powerpoint and didn’t do anything for a year. “They are very experienced rip-off artists,” he wrote.

A month later, though, Linderman retracted the statement and said something almost exactly the opposite: GreenHills’ Emanuel Martinez did do work for the company, did identify investors, he said. In fact, he went on to say that GreenHills effectively lost money on the project, spending way more than the $15,000 charged on due diligence, and that the investors GreenHills represented ultimately asked Martinez not to invest unless some changes were made. In other words, it wasn’t Martinez’ fault.

Finally, a critical post about venture capital firm Matrix also suddenly disappeared. In the original post, experienced entrepreneur Paul Baier had written in to say he and co-founder Raman Sud tried to raise money from Matrix for a start-up, but that Matrix passed. Matrix then called up Sud to express interest in pursuing another idea with him, in an apparent effort to “split” the founding team while it was fundraising, according to Baier. Baier said he was disgusted with the firm’s behavior. The post has since disappeared.

So why did all these posts vanish? Again, in all cases, VentureBeat was unable to reach each of the entrepreneurs who posted them, so it’s hard to get the real story.

But VentureBeat was able to find out a little more about each case, by calling the firms or reaching co-founders. In each case, they give arguments for why the entrepreneurs overreached with their original statements and why removal was the sensible thing to do.

Take for example, the post about Brekka and Dolphin Equity. I reached Brekka and he explained that it was the entire board, consisting of several members, that decided to replace the company’s founder, Levy. As Brekka tells it, Levy singled out Brekka for criticism because Brekka’s firm had led the round of capital, and he was nominated to be chairman. Part of the severance agreement with Levy included a confidentiality agreement, which Brekka says Levy breached by making the comment at TheFunded. Moreover, Brekka contends he isn’t raising money for a fund, as Levy had suggested, so the comments were untrue. He threatened legal action, and Levy removed it.

In the GreenHills case, I reached Martinez, the partner originally accused of being a “rip-off” artist. He explained that the investors he represented were “extremely interested” in Linderman’s company and wanted to invest, but that they’d also requested a more experienced CEO in place of the founder, Linderman. Linderman, a scientist with little business experience, was better placed to negotiate a technology licensing deal with a university and work with SBIR grants and to develop the technology, Martinez explains. When Martinez proposed that Linderman promote his partner, who had business acumen, to manage day-to-day operations, Linderman got upset, Martinez recounts, and decided against the CEO change. What’s more, Martinez spent $31,276 on diligence, including intellectual patent review and other costs helping Linderman, so had to write off more than $17,000 on Linderman’s deal, Martinez says. After seeing Linderman’s negative post, Martinez says he called him up, saying it was unfair and untrue, and Linderman agreed to take it down. He says there was no legal threat.

Finally, in the case of Baier, the critic of Matrix, we contacted his co-founder Raman Sud, who gave us his side of the story. He says Baier misinterpreted Matrix’s intentions regarding Sud and that the firm had not tried to split the team. Sud and Matrix’s partner, Tim Barrows, have a long relationship going back more than a decade and including a stint when Matrix backed a former company of Sud’s, Oat Systems.

Matrix and Sud had talked about a different business opportunity earlier on. Sud passed on that, and then decided to hook up with Baier and made the pitch to Matrix for their idea. Matrix partner David Skok called Sud’s cellphone to say Matrix wasn’t going to invest, but that Matrix would be willing to talk with Sud about their earlier idea. Baier heard the message, and took it defensively, Sud says.

Baier and Sud had been on the road trying to raise money and had been turned down by several firms and so were somewhat frustrated, Sud explains. Upset, Baier wrote the negative post. However, Sud then got upset and told Baier that his response was an overreaction, Sud says. He says the two then decided to ask TheFunded to take it down. There was no legal threat from Matrix, he said. “This is really a non-issue,” said Sud.

Truth, or whitewashing? You decide.

What follows are the texts of the original comments and copy of what replaced them:

Dolphin Equity Partners: Very Dangerous Fund
| Posted by allanlevy | Fund Rated 2.5

Rich Brekka the founder of Dolphin has been trying to raise another fund for 2 years now. It is unlikely that he will succeed and that is why Sal and the rest of the partners all left. I am the founder of SilverCarrot. In 2006 we took the business from $10 million to $28 million and were profitable. When Sal left the board Rich forced me out of the CEO position and took a leading role. Within 2 months they reorganized senior management took monthly sales down from $2.5 million to $1.2 million. By the end of 2007 the 3rd quarter of 2007 they had lost over $3 million. I brought 2 serious offers to the table to sell the business and Rich refused to entertain either, instead he crammed the common with an additional $2 million investment. Rich’s goal is to keep the company alive long enough so that he can exit on a few others. He is now doing exactly the same thing to another investment Epic Cycle. Very Dangerous Fund to get involved with.

Very Dangerous Fund
Fund: Dolphin Equity Partners
Posted by allanlevy on 2008-03-12 18:25:41 | User
Credibility: This may be the only post by this Member.
Posting Content deleted under threat of litigation


Great To Work With! Experts In The Tech Space And Honorable
Fund: Dolphin Equity Partners
Posted by Dorothy Young on 2008-03-12 17:35:52 | User

I highly recommend working with Dolphin if you have a real business that is founded on great technology. They have a huge portfolio of tech companies and are great about following through on strategic introductions and giving advice. I am the CEO of SilverCarrot, one of their investments. I have referred a lot of entrepreneurs to Rich Brekka who is always willing to help and told them straight out if he will invest or not.
Also, when Rich is on your Board he acts like a Board Member, not an Investor. Believe me, there is a difference!

Anyone who is interested in doing business with Dolphin should feel welcome to email me for a reference or more information anytime.


Green Hills Ventures, Llc
Fund: GreenHills Ventures
Posted by mlinderman on 2007-10-07 19:09:00 | User

GreenHills Ventures solicited our company to make the introductions to potential investors. Emanuel Martinez at GreenHills Ventures, LLC requested our company to pay them $15,000 upfront for introductions to potential investors. After they collected the money, they prepared the ugliest power point presentation, I have ever seen. I called them non stop for several months asking them to provide the service that we paid for. In the end of one year period Emanuel Martinez finally set up one presentation. I could tell, it was a setup to get him off the hook. As I expected, that was the end of it. They are very experienced rip off artists. Please do not let this happen to you.


Green Hills Ventures, Llc And Emanuel Martinez
Fund: GreenHills Ventures
Posted by mlinderman on 2007-11-14 21:20:33 | User
“On October 7, 2007 Mlinderman posted a message on this website (The October 7th Posting”) concerning the Company’s engagement of GreenHills Ventures, LLC and Emanuel Martinez to perform the required due diligence on the Company and to assist in identifying certain investors from GreenHillsVentures Wealth Management Group (which is a separate and distinct entity from the GHV Fund, LP, an early stage venture fund). I hereby unequivocally retract and rescind the October 7th Posting.

The Posting made reference to a $15,000 fee that was paid by the Company to GreenHills Ventures.

I think and believe that the fee received by GreenHills Ventures was used to cover only a portion of the actual out-of-pocket expenses and the Company has been advised the actual expenses incurred by GreenHills Ventures went over the fee paid for completing its due diligence and preparing a due diligence package and certain investor presentations for use by the Company. I also note that GreenHills Ventures and Emanuel Martinez succeeded in bringing an investor group to the Company with the appropriate background and expertise, but ultimately that investor and others decided not to invest in the Company.

The Company apologizes for making the Posting in haste and causing questions to be raised regarding the ethics and the good reputation of both Emanuel Martinez and the GreenHills Ventures team.

I do not and have never meant to suggest that GreenHills Ventures or Mr. Martinez acted unethically, or illegally, or improperly in connection with its agreement with the Company. Accordingly, I hereby retract the October 7th Posting in its entirety”



Matrix Partners: Unprofessional and Disappointing Experience with Matrix
| Posted by Paul Baier | Fund Rated 3.4
Unprofessional and Disappointing Experience with Matrix

I write to share my unprofessional experience with Matrix. My intent is not to be vindictive or voyeuristic, but to call for a higher level of professionalism and ethics in the VC industry. This incident was surprising given the positive interaction I’ve had with the firm over the years.

The Specifics:

My co-founder, Raman Sud and I, are currently raising funds for a new startup. We are familiar with the process, as co-founders in 1999 we raised $34mm from CRV, Bessemer, Sigma Partners, and Rho Management for a b2b dot-com. Each of us have worked in a number of venture-backed startups and publicly-traded firms and have referred numerous candidates to the VCs.

Matrix decided to pass on our deal (which is fine, as most firms do pass). What I found less acceptable were the activities around this communication.

The senior partner at Matrix did not communicate directly with me (the CEO) the decision to pass, but instead left a voice mail message for my co-founder Raman (the VP Eng). In this voice mail, the Matrix partner explained his reasons for passing, but then expressed his interest having my co-founder investigate other opportunities with Matrix. In short, after passing on the deal, the Matrix partner tried to split the founding team while team was continuing its fundraising.

I have communicated my disgust with this behavior to the partner and do not wish to get into a ?he said , she said? volley on this board. The facts are not in dispute. I see no merit other than sensationalism in posting a digital recording of the voice mail, which we have.
This behavior reminds me again of the need for a higher level of professionalism and ethics is this industry. My calling out of Matrix on this behavior is my small effort toward this end.

Paul Baier
Boston, MA