Do VCs Need A Report Card?

from the good-or-bad? dept

Here's a debate that's been going on for a while. As it stands now, VCs don't really need to disclose how their portfolio companies are doing and can pretty much value the company however they want - until they're gone, sold, or going public. This leads to some vast discrepencies in how different VCs value the same exact company, and that (perhaps) should be a concern to the people who have invested in VC funds. This article calls for a more standardized disclosure process, a VC report card, to help keep VCs honest. I understand the arguments, but I there certainly are downsides to doing things that way as well. As soon as you add in that public report card, you get a Wall Street Effect - where companies will be pressured to do short term things to boost these public numbers. The nice thing about being a private company was that you didn't necessarily have to worry about those things - and could take a longer term view.

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