Craig Newmark testified on Thursday that he regretted getting into bed with auction site eBay (EBAY) almost as soon as his head hit the pillow. The founder of Craigslist, the online classified site that has decimated large chunks of the newspaper industry, sold 28% of his company to eBay in August 2004. Within months, he recounted, eBay began to pull back on its promises, causing him to regret the decision.

During the negotiations more than five years ago, Meg Whitman, who was the CEO at the time, told Newmark that eBay would be happy to sit back as a minority shareholder for several years and use Craigslist as its exclusive venue for classified ads. Yet, shortly after the deal closed, eBay pushed for a bigger piece of the company and acquired an online classified company outside the United States. Both Whitman and company founder Pierre Omidyar testified that eBay was clear about its intentions.

The lawsuit, filed by eBay against Craigslist, involves the size of the former's minority stake in the privately held, relatively low-tech and highly popular classified site. eBay claims that Newmark diluted its share to 24% through a "self-dealing" scheme to issue more equity.

Last week, I talked with Craig Donato, the CEO of Oodle. I've followed his company from its early days and he's certainly made significant progress. In fact, he was able to raise $11 million from top VCs like JAFCO, Greylock Partners and Redpoint Ventures.

I asked him if it was getting easier to raise venture capital?

While Craig agrees there is a lot of money VCs are still willing to give away, there has also been a change in their selection process. Specifically, if the company does not show proof points -- like revenue traction -- after getting an initial funding, it's a good bet VCs will not invest any more. "We may see more companies that just die," said Craig.

As for Oodle, it has a very cool model. It aggregates more than 20 million classified listings from more than 75,000 sources and provides some useful tools to help its users. For example, let's say you want to buy a 2004 Honda Accord. Oodle will actually provide you with inventory and pricing trends. "We also take into account regional differences," said Craig. "These can be very important for pricing."

Craig also thinks the business model for classifieds is due for disruption. According to him: "I think classifieds will be free to post. So how do you make money? It's basically using the Google Inc. (NASDAQ: GOOG) approach. You will pay to get premium placement on the search listings. Basically, payment is based on performance."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.