When New York En–trepreneur Adeo Ressi encountered a lot of frustration securing a second round of financing for Game Trust, an online gaming platform he launched in 2002, he decided to help others benefit from his experience. Ressi set up www.-TheFunded.com, an information resource for entrepreneurs looking to raise money from venture capitalists or private-equity firms.

Ressi ended up selling Game Trust, but the Web site has proven highly successful since its launch this past March.

TheFunded.com boasts 3,811 members, most of whom are CEOs of small companies, as well as ratings of 2,630 VC funds and a total of 6,830 reviews of these firms. Among the firms listed are 144 based in Canada, including RBC Capital Markets, CIBC Capital Partners — Venture Group and Clairvest Group Inc.

Ressi maintains that his bad experience was not the sole reason for launching the site. Instead, he needed to raise venture capital and wanted to avoid any bad experiences in the future. “It’s a subtle difference but an important one,” says Ressi, 35. “Any entrepreneur or CEO who has tried to raise money will convey difficult stories of the process. But not all the stories are difficult ones. There are good ones as well.”

The key is separating good investors from bad. “Without information, it’s almost impossible to do,” Ressi says. “You are relying on reputation and hearsay that don’t correlate well with reality.”

He notes there are “great funds with great reputations that are well deserved,” and “great funds with great reputations that are not deserved.” Moreover, he says, a lot of small VC funds do a good job but don’t get the credit they deserve; Ressi cites First Round Capital as an example.

There are two objectives behind the Web site. “I want to streamline dramatically the fundraising process,” Ressi says. “Success is considered the ability of an entrepreneur to raise capital by pitching less than 10 funds, in about two months, with fair deal terms.”

In today’s environment, however, the average entrepreneur has to pitch 50 funds in a process that lasts six to 12 months, which often results in highly complex deal terms.

Ressi is calling for a major shift in the way venture capital and private equity operate. The process is often so time-consuming and draining that it is very hard to secure financing. “The problem with raising capital today is that there is an asymmetrical relationship in almost every facet of the process,” he says. “You are the person with the need for capital, and they have it. You do very little research on them, but they do a lot of research on you. It’s an asymmetrical process.”

As a result, if a CEO makes a wrong decision about an investment partner, “it can destroy the prospects of the company going forward,” says Ressi, who decided to sell Game Trust rather than choose the wrong partner.

His second objective is to foster more innovation. He notes that in the VC world, many ideas don’t get financing: “But there are a lot of me-too plays that get financing. Social networking and video applications are very popular. In my opinion, that’s not a good thing overall for the economy.

“If you could fund the more innovative businesses,” he adds, “you will get a greater social return on the US$60 billion that the broader VC industry invests each year.”

One way to boost innovation is to promote the matchmaking activity between in-house experts at VC funds and possible candidates for capital, Ressi says: “If you could offer a material sciences company to a materials science expert at a VC firm, the probability of investment would be higher. It’s a matter of matching the appropriate investor with the appropriate company.”

This ideal is difficult to achieve because of lack of information. “The most severe examples are in medical technology and biotechnology,” he notes. “It’s not easy to find the perfect specialist at an investment firm who will [appreciate] your idea.”

The Web site tries to fill the gap with information and tools. About 40% of the information on the site is free to non-members, and the 3,832 members — either CEOs who get free access or about 200 subscribers who pay US$250 a year for a subscription — have access to the other 60% of the data.

@page_break@Members have access to detailed but anonymous reviews of VC funds and other information such as partner specialties, how long it takes to close a deal and the specific criteria the VC firm seeks in an investment. The site also includes contact information for partners at each VC firm. With a few clicks of a mouse, members can import data into Microsoft Outlook software and contact partners at a VC firm that may be the right match. They can also provide feedback on those partners.

Ressi rates each firm on an average of five criteria, such as track record and execution assistance. The average rating for all the VC firms is 2.6 out of five.

Ressi says the Web site, which has proven to be more commercially successful than expected, is distinctive. “No other site in the world has the amount of data on VC funds that we do. No other site has thousands of CEOs reviewing these funds,” he says, adding that his site has developed extensive profiles of the VC funds.

He argues that the strength of the site is that the reviews are written by CEOs: “I’d rather have the review [by] the CEO over the review [by] a journalist. It’s very different having a day-to-day working relationship with a fund. You don’t have that if you are a journalist.”

The manner in which the tables have been turned has hit a nerve in the VC industry and has been reported in prominent media outlets such as the Wall Street Journal. In their reviews, some CEOs have attacked venture capitalists as “rude” or “arrogant.” But they have also praised them, presumably because the venture capitalists had the good sense to back an investment.

Ressi takes the criticism in stride. “This is the first time in the history of venture capital that many of these firms have ever received honest feedback and constructive criticism,” he says. “You have to understand the context to appreciate what that means.”

For typical venture capitalists, who spend their days being asked for money, Ressi’s Web site is the “first time they have received feedback on their performance,” he says.

What do venture capitalists think of TheFunded.com? Don Butler, president of Thomvest Ventures Inc. , which has offices in Los Altos, Calif., Nassau, Bahamas, and Toronto notes that reviews on the site are split between two types of comments: “There’s a group that got funding and another that didn’t. If I had any input, I’d recommend the site have an additional data set, such as ‘Were you funded or not?’”

Butler adds that the site needs refinement. Like eBay’s rating system, the reviews are only as good as the system for screening out people with ulterior motives. He says he was surprised by Thomvest’s 4.6 rating, which was based on one review.

“My guess is they will continue to revise how they screen reviews,” Butler says. “For anybody trying to get data on reputations, there is a lot of good stuff there. Many of the comments are roughly on the mark. The VC industry has been somewhat ‘clubby.’ This flushes some of that out, and helps entrepreneurs see whether [a VC firm] is good at providing assistance.” IE