Venture Ethics

Fred Wilson, the well known technology investor and all around inspirational guy, wrote a blog post yesterday titled Ethics and Morals. In it, he wrote about a Venture Capitalist who turned down an investment opportunity with a company, and shortly thereafter provided an angel round for his son in a competing business.

There are more details, and the entire post is worth a read.

But one of the things with the post is he didn’t actually name the name of this venture capitalist. And that’s fine I suppose, but it prompted me to ask this:


I asked the question because this isn't the first time I've heard an investor call another investor out in public, without actually calling them out.

I recall Dave McClure calling out investors for blocking early stage investors from participating in follow on rounds (another thing Fred Wilson's written well about here), for example. 

There too - no names.

What I'd like to argue is that these public announcements, in and of themselves are problematic for entrepreneurs, are counterproductive to the investor's goals of attracting the best entrepreneurial talent, and underscore the very reason why people like me don't trust investors. 

To be clear, I don't mean this in the "I don't trust them personally" kind of way. My guess is they're both probably pretty awesome, their firms are the best in the biz, etc. I think they're the 'good guys' is my point. 

And also, Fred does yoga!

What I mean is, I don't trust their industry, and these non-outing outings help explain why.

To be good it seems to me investors have to simultaneously compete with each other, and collaborate with each other. This is so much grey for someone like me I can barely take it. And I don't mean this in a positive way about myself, I just mean it just sounds so damn hard.

But all I see when I read these non-outing outings is the fact that it's more important to protect the investor to investor relationship than it is to warn entrepreneurs about the shady investor.

And look, I get it.

I actually changed my mind in the process of writing this post about whether it was 'right' or 'wrong' not to mention names. We've had numerous investors reach out to us about Tula, while proudly including the fact that they invest in our main competitors. And all I can think to myself is: someone who wants to invest in us might be reaching out to our newest competitor in three years?

But I don't want to call these people out either.

What I initially thought was irritation that these investors weren't naming names is actually touching something deeper. How these dots connect for me now, is they highlight very clearly that there is an investment world, and there is an entrepreneurial world and in between there is a chasm of trust.

It makes me sad when investors I like and follow and admire are contributing to making this chasm larger instead of smaller, especially when they are each usually doing the latter.

But the fact of the matter is that they both have had a situation where they've fired shots across the bow at other investors, using a dog whistle instead of a bull horn, while on just about every other industry related topic they are talking openly and in public.

I think it's great that we're talking about ethics, but let's be clear, these are venture ethics, which still leave some open questions for the entrepreneur.