search: results update below


browse funds: selections are stored



recently rated:

Rated by 13
3.5

top rated funds:

Rated by 12
4.4

Rated by 19
4.0

Rated by 12
4.0
 

Rated by 39
3.9

Rated by 55
3.8

Rated by 30
3.8

Rated by 101
3.8

Rated by 29
3.8

Rated by 14
3.8
 

Rated by 27
3.8

Rated by 56
3.7

Rated by 16
3.6
 

Rated by 29
3.6

Rated by 15
3.5

Rated by 20
3.5

Rated by 11
3.5

Rated by 45
3.5
 

Rated by 41
3.5

Rated by 11
3.5

Rated by 12
3.5

Rated by 15
3.5

Rated by 38
3.4
 

Rated by 25
3.4
 

Rated by 29
3.4
 

Rated by 26
3.4

Rated by 38
3.4

Rated by 38
3.4

Rated by 52
3.4

Rated by 45
3.3
 

Rated by 15
3.3
 

Please take a moment and make a financial contribution to TheFunded. If we have helped you, help us with resources to open a free CEO lounge in the heart of Silicon Valley. Thank you!

Member Post

TheFunded.com is an online community of entrepreneurs to research, rate, and review funding sources worldwide. In addition, TheFunded.com allows entrepreneurs to view and share term sheets, to assist one another finding good investors, and to discuss the many facets of operating a business. Enjoy!

Sign-up for Membership

2
Agree
0
Disagree

Two VC Firms (OVP, DFJ) Exposed for Incompetence

TheFunded.com Open Letter

Posted by Krassen on 2009-06-29

PUBLIC:

I am the Founder of NanoString Technologies, Inc. As laid out in previous comments here, I fought with the NanoString’s VCs over product strategy, for which I got fired for cause; but was able to save the company, nevertheless, by bringing the mismanagement issues to the attention of OVP’s LPs.

http://thefunded.com/funds/item/4884
http://thefunded.com/funds/item/4786

Of course, what happened at NanoString was not an isolated example of bad judgement by these VCs, as reflected in their poor performance. DFJ’s lack of returns was exposed in a scathing Forbes article a few months ago:

http://www.forbes.com/forbes/2009/011...

Meanwhile, OVP’s performance is absolutely laughable (that is, unless you are one of their LPs, in which case laughing is the last thing on your mind). To date they have only returned ~$20M of their $125M ‘99 fund, and only ~$23M of their $180M ‘01 fund.

Perhaps the most blatant example of incompetence is the investments made by OVP and DFJ in companies that defied the laws of physics. I have published a couple of simple but specific reports about two such companies: GreenFuel Technologies, Inc. (DFJ) and M2E Power Inc. (OVP), demonstrating with high-school level physics that these were completely unworkable ideas. The news now is that in the last month both of these companies (predictably) imploded.

Here are more details.

1. GreenFuel was an overhyped biofuel startup; its founder was named one of Time magazine 100 Most Important People for 2008:

http://bit.ly/18KzCU

They received the very prestigious Frost and Sullivan Award:

http://www.businesswire.com/portal/si...

as well other awards: (Platts Global Energy Award for Energy Emissions Project of the Year (2006); Red Herring 100 North America Award (2006); Fast 50 (2007); 20 Plenty Hot List ; Go Green Award)

Here’s a link to my report

http://www.nanostring.net/Algae/CaseS...

And the news about their inevitable blowup:

http://i-r-squared.blogspot.com/2009/...
http://earth2tech.com/2009/05/13/see-...
(some delicious comments at the bottom there)

2. M2E Power, Inc was hyped by OVP for their self-charging batteries for consumer electronics, (as well as for military applications).

http://www.businessweek.com/technolog...+news_top+news+index_technology

and was named innovation #2 for 2007 by CNET:
http://www.cnet.com.au/top-10-innovat...

Here’s a link to my report:
http://www.nanostring.net/M2E/M2E_Stu...

And the news by Reuters (last Friday) of the inevitable blowup :
http://www.reuters.com/article/earth2...

The lesson here is that the laws of physics do not care about the hype generated by VCs with overinflated egos. Science always wins.

How can you use this info? If you are in the OVP or DFJ portfolio and feel like they are messing up with your business, use this information to hint that they are not the ones to talk. If they don’t fall in-line, write to their LPs; even though the LPs do not have direct administrative power over the GPs, this should create enough pressure for them to do what is right for the business. But by any means: do not let these incompetent and ignorant money-losing machines have a say on how the business should be ran. I learned this the hard way.


(PS: While it is true that the bulk of the responsibility falls on the partners who drove these deals (Jennifer Fonstad for GreenFuel and Gerry Langeler for M2E), do not forget that most VC firms require consensus for a deal to take place, so the other partners are responsible, too.)

Posted by Mr Objective on 2009-06-29 11:23:32

Perhaps it would have been better to post this in a place where the people you mention could respond.

Posted by ECCEO on 2009-06-29 15:16:10

This is a terrific post and I am surprised that there are no other responses. Thank you so much for doing this.

The main message I take away is one can stand up to incompetent VCs and ask them to stop screwing up the company's future.

Bravo!

Posted by Krassen on 2009-06-29 16:56:38

@Mr Objective, good point. Any suggestions? Feel free to repost on my behalf, if interested.

Posted by hourglass on 2009-06-29 21:39:31

Pretty interesting post. Thanks for the candid thoughts.

Posted by ammosov on 2009-07-01 11:15:54

Wow. Basically, what Reuters said is that VCs funded a perpetuum mobile...

Posted by carlwimm on 2009-07-02 03:24:47

To Krassen

I hardly ever post in this forum But I couldn't resist posting here.

The real lesson for you is not what to do when you fight with the VCs but to arrange your affairs in such a way as not to need them at all.

It can be done.