In Michael Arrington created a mini media empire in Silicon Valley that he sold to AOL a year ago for a reported price of $30 million. Now he has entered into collaboration with Patrick Gallagher of VantagePoint Venture Partners to raise a $20-million venture capital fund, which will invest in early-stage technology companies. Patrick Gallagher had gone to college with Arrington at Claremont McKenna College.
The VC fund has been named CrunchFund, and it will aim to make investments of between $100,000 and $200,000 in young companies alongside other firms. The fund will not lead or price a round of funding. Like most news providers, AOL prohibits reporters at its media sites from investing in the companies they cover. But for Michael Arrington, who continues to TechCrunchs editor, they seem to have made an exception. However, Arrington will be taking a backseat as the editor, as AOL is looking for a new managing editor for TechCrunch.
Arrington has stated that his investments will not influence TechCrunchs coverage, and that he would continue to disclose that he had invested in start-ups across the site, including on each post about the start-ups. The funds contract with its investors says that he can continue to publish critical or negative posts or disclose confidential information about the investors or the companies in which they have invested. In the past also the line between blogging and investing has been blurry for Arrington.
TechCrunchs rival, Gizmodo, has already criticised Arrington decision to be part of a VC Fund in an article titled, Aol: Youve Got Conflicts. The article says, Arrington is notorious for trading access for coverage and has previously been criticized for investing in the industry. It's no surprise that he doesn't view this as a problem. He plays by his own rules, and makes no bones about that. Good for Mike.
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