boston.com Business your connection to The Boston Globe
Scott Kirsner | Innovation Economy

In venture capitalism, a growing rift over blogs

Among the investments that Jim Savage, a Waltham venture capitalist, is considering is a North Carolina company introduced to him in an unorthodox way: The entrepreneur posted a comment on Savage's blog.

Savage, a partner at Longworth Venture Partners, hasn't yet put any money into the start-up, which he declined to name. But he says it's unlikely that he would've run into this particular entrepreneur otherwise, since he doesn't often troll for promising companies in the land of the Tar Heels.

There's a bifurcation happening in the Boston venture capital world: Some firms blog, and some don't. And the divide isn't just about being hip to the latest trend. It signifies an important shift in the way VC firms interact with entrepreneurs.

The typical old school, non-blogging VC firm has an office at the Bay Colony Corporate Center in Waltham, a phalanx of assistants, polished wood conference room tables, and an endless supply of bottled water.

The partners are comfortable relying on existing networks to introduce them to promising entrepreneurs. When an entrepreneur gets an opportunity to ascend the temple mount and pitch her start-up, she's expected to know what the partners are interested in by talking to other entrepreneurs or reading the tea leaves of the firm's past investments.

By contrast, VC firms that maintain blogs tend to use them to write about the sectors they're most interested in or share advice with entrepreneurs. By letting anyone post comments that challenge the blogger's opinions, VC blogs place their authors on a level playing field with entrepreneurs. The act of maintaining a blog, when done right, communicates openness: It's a conversation, not a monologue.

Especially among younger entrepreneurs, blogging turns venture capitalists into "one of us" - part of the entrepreneurial community - rather than "one of them." At a conference held in Cambridge last month, a parade of entrepreneurs demonstrating the Web-based applications they'd built made repeated reference to the VC bloggers in the audience - in particular, Fred Wilson of New York City's Union Square Ventures. VCs in attendance from Matrix Partners, Highland Capital Partners, and North Bridge Venture Partners might as well have been invisible. They don't have blogs.

Venture capitalists who blog say it isn't just about helping pump up their firm's reputation and show how market-savvy they are. Blogging, writes Wilson via e-mail, is "the best tool for VC investing that I've ever seen, and I've been in this business for more than 20 years."

Wilson says his blog not only helps him meet more start-ups, but it brings him companies that are "more targeted and more relevant" to the areas he's interested in. Wilson also likes it when his readers argue with him or tell him about companies he might not already know; it's not unusual for one of his posts to attract 25 or 30 comments. "You can't buy that kind of education," he writes, "and I get it every day for free."

Jeffrey Bussgang of IDG Ventures was the first VC in Boston to start blogging, in early 2005. "It helps me be more approachable and informal in building relationships with entrepreneurs," he says. Bijan Sabet of Spark Capital uses his blog as a kind of sandbox, to try out different Internet applications; a tower of software "widgets" in the right-hand column of Sabet's blog tell visitors what songs he has been listening to, where other visitors to the blog hail from, and what he's doing at the moment. "I want to bang on these products and play with them," Sabet says. "It helps me figure out whether a particular technology is meaningful or not."

So what are the arguments against blogging?

"It takes a lot of time," says Jeff Fagnan, a partner at Atlas Venture in Waltham. "We choose to dedicate that time to other outreach and marketing efforts," he says, such as schmoozing with entrepreneurs at sporting events and concerts.

Woody Benson of Prism VentureWorks says the Needham firm has spent years gaining venture capital experience, "something that we call our intellectual property."

"Our goal is to share that in the confines of the meetings that we have with our portfolio companies and potential portfolio companies," he says.

Larry Bohn, a partner at General Catalyst, a Cambridge firm in the middle of raising a big new investment fund, prefers to maintain a low profile. "I don't think blogging is an effective deal-sourcing mechanism."

He dismisses the idea that not blogging means that a firm is giving entrepreneurs a cold shoulder: "It's very easy for young entrepreneurs to get meetings with us," Bohn says.

Charley Lax, managing general partner of Grand Banks Capital in Newton Centre, says the limited partners who put their money into venture capital funds think blogging is "stupid. They want you to be working on your portfolio companies and looking for the next great deal."

I don't think entrepreneurs will blacklist VCs who don't blog, but I do think that over time, VCs who do will simply see more deals, a few of which could prove winners. When I spoke recently to Jon Radoff, founder of GuildCafe, a Cambridge start-up, he told me that he didn't pitch IDG Ventures just because two of its partners have blogs. But he did feel better prepared to have a conversation with them, having read their blogs beforehand.

GuildCafe, an online community for gamers, accepted a small first round of funding from IDG in July.

"My gut says that there's no correlation between VC blogging and financial returns," Spark Capital's Sabet says, noting that blogger Fred Wilson has done well with his investments - but so has John Doerr of the Silicon Valley firm Kleiner Perkins, who doesn't blog but has put money into Amazon.com Inc., Google Inc., and Intuit Inc.

But as entrepreneurs increasingly maintain blogs of their own, Bussgang says, "they want to see that the VCs are their peers and are wrestling with similar issues and thinking through things."

That's the new parity in the world of venture capital.

Innovation Economy is a weekly column that will focus on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox.com.

Area firms with blogs:
Name Firm and Location Blog
David Beisel Venrock, Cambridgegenuinevc.com
Jeffrey Bussgang IDG Ventures, Bostonseeingbothsides.com
Mike Hirshland Polaris Venture Partners, Walthamvcmike.wordpress.com
Bijan Sabet Spark Capital, Bostonhttp://sabet.typepad.com/bijanblog
Jim Savage Longworth Venture Partners, Walthamlongworthblog.com

More from Boston.com

'Related'

TO BLOG OR NOT TO BLOG? Venture capitalists and entrepreneurs discuss the impact of blogs on the start-up world at boston.com/business.

SEARCH THE ARCHIVES