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Interesting perspective and great points raised.

But it seems what the VC leaked was info he got as participant in the current funding round (vs ongoing stats thereafter), which by default was subject to confidentiality anyway.

From founders’ viewpoint, this case outlines why it’s better to have fewer investors writing more substantial checks – easier to manage anyway. But unfortunately, not everyone can swing that, hence the party rounds.

Here is my take on it:

he led the deal, but let the cap table get filled up with small investors that he has no relationships with. He even “allowed them in.” (presumably to distribute downside risk in actuality)
he led the deal, but doesn’t seem to be aware of what the investor rights agreement said re: information rights.
he led the deal, but his deal doc’s didn’t reflect the thresholds he sees as best practices
he led the deal, but didn’t discuss with management what to send out.

These are things LPs pay attention to: fail to live up to your “value add” / actually doing your job, have issue, air dirty laundry in public in the name of being “helpful.” But keep that blog flowing…

His issue is that someone is trying to raise money (improperly) on the basis of this deal; this is not a “competitor just got all our information” situation. Remember “he led the deal” – credit should flow to him.

re: transparency – if it doesn’t serve a specific marketing purpose, you won’t see it.

+The other thing that also just occurred to me is: This is overall mostly VCs fault because they usually refuse to state who put in how much in a given round. If they embraced transparency, that investor wouldn’t have been able to pull that shit. Really though, what good reason do they have to hide their stakes in a round?

You seem to assume that non-institutional investors automatically fall under those to get less info, while I don’t. I view the info restriction threshold as something occurring post investment and set by per percentage of total ownership, not amount. E.g. a 5% limit = if your few $00,000 that you mention equates to more than this then you get more info. This precludes info for in this round, ie you’d receive same level of detail sent to all “screened serious” investors for this round because you obviously need some detailed info to make your final decision. Serious meaning those who have gone through 2nd meetings, dug deeper and looking to invest, versus more general info sent out to all prospectives at first bite.

Suster also does mention in the post that he recommends a high-level reports a few times a yr. For me sensitive info would be strategic like you mentioned and some tactical like detailed financials. I’d go for sending high level overview of finances (rather than none) but refrain from details.

“the company was sending around powerpoint decks with presumably sensitive information. Where was he and the board? ”

Good point – he may not have known they did so until after, or none of them realized that there were no info rights clause in the termsheet until after?

I understand your concerns, but there’s nothing as bad as having your competitor know how you’re doing now in detail; where you’re vulnerable, etc. due to leaks.