Michael Arrington Resigns From TechCrunch, But Conflicts of Interest Follow AOLHuffingCrunch Post

2659048381 c58fc5bede Michael Arrington Resigns From TechCrunch, But Conflicts of Interest Follow AOLHuffingCrunch Post

via Joi's Flickr

Michael Arrington has been dodging questions over bias and journalistic integrity ever since he got back into the investing game earlier this year. But we guess launching a $20 million venture capital fund has a way of making the issue hard to ignore. Yesterday, shortly after closing a fund, Mr. Arrington resigned from his role as managing editor of TechCrunch, reports the Wall Street Journal.

“Mike will run the fund and will continue to write for TechCrunch, but will have no editorial oversight,” AOL spokesman Mario Ruiz told the paper, noting that Erick Schonfeld, co-editor, will serve as interim editor while AOL tries to find a personality to replace Mr. Arrington.

That said, AOL Huffington Post doesn’t appear to be making any signs to distance itself. AOL is leading the limited partner group in the less-than-subtly named “Crunchfund.” And the roster of contributors reads like a regular cast of characters from the blog. VCs like Kleiner Perkins Caufield & Byers, Greylock Partners, Redpoint Ventures and Sequoia Capital invested $1 million a piece. Individual investors include Marc Andreessen, Ben Horowitz, Ron Conway, Kevin Rose, and Yuri Milner.

According to the  Journal‘s sources, “AOL sought to be the sole limited partner of the fund, but that Arrington thought differently.” It’s not surprising that Mr. Arrington wouldn’t want his old bosses involved. Among investing luminaries like Mr. Andreessen, Mr. Milner, or Kleiner Perkins, all of whom have been aggressively investing in hot startups, despite inflated valuations, only AOL seems to come from left field.

The fact that Mr. Arrington will continue to blog, as many VCs do, seems less troubling at the moment than the fact that AOL, which has been on a hiring binge for journalists even before its merger with the Huffington Post, is now in bed with limited partners who back startups featured in both TechCrunch and its conferences.

As Gizmodo’s Mat Honan points out:

“That’s pretty shocking. It means that not only will Aol’s TechCrunch be reporting on the companies it invests in (and their competitors) but that other Aol properties like the Huffington Post will have a financial incentive to give the fund’s investments positive coverage.

I wonder how Mike’s boss Arianna feels about all of this.”