Michael Arrington Out at TechCrunch, In as VC

Michael Arrington is most comfortable around startups. Whether covering them as the influential editor of TechCrunch—the blog he started out of his California home and grew into a must-read for anyone following the tech entrepreneurial space—investing in them as an angel, or closing M&A deals for them as a lawyer, Arrington has long told their stories in many different ways.

And now the brash blogger is going back to the startup scene full-time with a $20 million venture capital fund—aptly named CrunchFund—which is backed by some of the heaviest hitters in the business. He is no longer an employee of TechCrunch, and is instead an employee of AOL Ventures. The CrunchFund and AOL Ventures will operate separately.

Investors such as Austin Ventures, Kleiner Perkins Caufield & Byers, Greylock Partners, Redpoint Ventures, and Sequoia Capital have each kicked in $1 million because they believe that Arrington’s cozy relationships with startups will put them in prime position to pounce on good prospects, reports the Wall Street Journal.

With his foray back into the investing scene, Arrington is exiting editorial duties at TechCrunch, although he will continue to write for the publication for free.

As Felix Salmon writes in Reuters:

In many ways, then, the bigger story here is the fact that AOL has lost its highest-profile journalist—the biggest brand name in the company, with the single exception of Arianna Huffington herself.

While it is Arrington’s connections that other venture capital firms gravitate toward, it is his associations with the companies he covers that often cross the lines of journalistic integrity. And they’ve caused him headaches throughout his career. In 2009, he decided to back off from his angel-investing moonlighting, writing that such activity left TechCrunch open to attack from "competitors and disgruntled entrepreneurs."

Kara Swisher of AllThingsD called Arrington's departure really just "the formalization of a long-standing arrangement that has already been going on since he founded his popular tech blog." She goes on to write:

That is to say, in which the basic standards of journalism are first warped by calling it newfangled truth-telling and then endlessly corroded by using a wily and unusually aggressive combination of favors and threats to extract, from startups and VCs in need of press, both exclusive access and information.

And now, inevitably, money.

Arrington was quoted in Forbes today as saying he would continue to disclose his investments as he writes about companies for TechCrunch. “I know I’m a lighting rod,” Arrington told Forbes. “But look at Om Malik. He’s a partner in True Ventures, and nobody screamed about that. We’re going to work it out.”

In the Twitterverse, this pithy line summed up feelings of contempt for the lawyer-turned-blogger-turned-VC: "There is no better confirmation of a bubble than Michael Arrington raising a VC fund. See ya on the other side, brother."

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Kent Bernhard Jr. is News Editor of Portfolio.com