Super Angel collusion
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Damn, the secret hell of angel investors in San Francisco has come to all of our attention over at Techcrunch . Mike Arrington started out the week reporting that there was a secret meeting of 10 angel investors who met over dinner. All well and good.
Yesterday I was tipped off about a “secret meeting” between a group of “Super Angels” being held at Bin 38, a restaurant and bar in San Francisco. “Do not come, you will not be welcome,” I was told. So I did what any self respecting blogger would do – I drove over to Bin 38, parked my car and walked in. in the back of the restaurant in a private room was a long oval table.
Mike Arrington posted about a secret meeting of angels and super angels in San Francisco the other night. In the post he suggests that they are colluding to keep valuations down, terms intact, and traditional venture capital firms, such as ours, out of their deals. It's the kind of blog post that Mike has become famous for.
So i've been debating whether to write this post all day. Unfortunately i probably have more balls than sense, but it drives me fucking insane to see some bullshit superangel conspiracy theory get whipped into a frenzy by people who weren't there, have no idea what the hell was discussed, and are ready to believe anything when someone yells FIRE! so here goes nothing... first a few clarifications:
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Like everyone else I’ve been reading and watching Mike’s latest ‘AngelGate’ story unfold for the last few days. It’s interesting to see lines so clearly and predictably divided on who is to be believed. If you’re an entrepeneur you believe Arrington. If you’re an Angel/VC you believe the attendees responses like that of Dave McClure and Chris Yeh and laugh the whole thing off .
Michael Arrington, the TechCrunch founder and blogger, threw a bombshell into Silicon Valley with a blog post on Tuesday night , accusing the Valley’s top angel investors of colluding to reduce the price of investing in tech start-ups and keep competitors from investing. Now, a few of the angel investors are firing back. In his post, Mr. Arrington said he was tipped off about a secret meeting of the Valley’s most prominent angel investors at a San Francisco restaurant.
I like a good conspiracy theory as much as the next guy and some of the Hitler Angelgate parodies are really funny, but the alleged attempted collusion is a nonissue if only because even if the super angels tried to collude they would be bound to fail. One of the main allegations is that the colluders would agree to keep valuations low on deals they want to invest in in order to maximize returns. Collusion can work in a number of circumstances. The biggest incentive to collude is in oligopolistic markets with high barriers to entry where few players control the market.
Here in Europe we’ve been fascinated by what has become known as AngelGate . But after talking all day to many contacts today across the tech scene in Europe, I’ve reluctantly come to the conclusion that I’m not about to blow the lid on anything similar in Europe. Leave aside the arguments about what happened at Bin 38 , and taking on the hypothetical situation that “Super Angels” (and there are handful) might be colluding in Europe, I’m afraid there is no evidence for this (at least that I can find). Here’s why. There is clearly enough competition over deals in the US to lead some people to feel the need to organise a dinner to work all this out (as I say, leaving aside all the accusations about why and for what purpose).
Kings (VCs), Barons (Angels, super or not), Knights (Entrepreneurs) and Surfs (engineers) ?! WTF ? by Sep 26
On the surface, it seemed like the situation that has come to be known as AngelGate was dying down. Since we broke the news about the secret meetings between angel investors where they supposedly agree to agree on things, a lot has been said on both sides. Mike said what he knew, and one of the angel investors present at the meeting he crashed, Dave McClure, came out in opposition to the allegations. But things have gotten more interesting this evening.
It’s a bombshell. No, it’s a nuclear bomb. It speaks for itself.
If angel investor Ron Conway wants us to post something here on TechCrunch, we’re going to post it. This morning he asked us to do just that. This is a clarification, he says, to the private email slamming investors over “ AngelGate.” That private email became significantly less private last week when we posted it here on TechCrunch.
As I said the other day , there would be more private emails getting published. This one is from Chris Sacca , a prominent “super angel” who was not at the meeting I stumbled into but was at a previous meeting. He wrote a response to the Ron Conway email . It’s worth pointing out that this email is time stamped a good half hour before our story broke, meaning he wrote it thinking it would all still stay private. This is also the first leaked email we’ve received that actually includes names in the header of some of the people who are involved in this mess.