No, I don’t have any opinion about Angelgate (the secret meeting of Super Angels in Bin 38, a restaurant and bar in San Francisco). I know very little about the world of startups & Angel Investors and am far less qualified to comment on it but I really liked the way Arrington reported the story and the way Alex Blagg responded.
Read Mike Arrington’s account here who broke the story. Without naming the meeting participants, Mike refers to their discussion as Collusion and Price Fixing.
This group of investors, which together account for nearly 100% of early stage startup deals in Silicon Valley, have been meeting regularly to compare notes. Early on it was mostly to complain about a variety of things. But the conversation has evolved to the point where these super angels are actually colluding (and I don’t use that word lightly) to solve a number of problems, say multiple sources who are part of the group and were at the dinner. According to these souces, the ongoing agenda includes:
Complaints about Y Combinator’s growing power, and how to counteract competitiveness in Y Combinator deals
Complaints about rising deal valuations and they can act as a group to reduce those valuations
How the group can act together to keep traditional venture capitalists out of deals entirely
How the group can act together to keep out new angel investors invading the market and driving up valuations.
More mundane things, like agreeing as a group not to accept convertible notes in deals (an entrepreneur-friendly type of deal).
One source has also said that there is a wiki of some sort that the group has that explicitly talks about how the group should act as one to keep deal valuations down.
At least two people attending were extremely uneasy about the meetings, and have said that they are only there to gather information, not participate.
So what’s wrong with this?
Collusion and price fixing, that’s what. It is absolutely unlawful for competitors to act together to keep other competitors out of the market, or to discuss ways to keep prices under control. And that appears to be exactly what this group is doing.
Now read this response from Alex Blagg, one of the “Super Angels” in the room when Mike visited. Hilarious J
Us: Why are you shouting? Who are you?
Him: It’s me, Michael Arrington, your friend.
Us: We might have said hello to you at a panel-conference once, but we’re not really friends.
Him: I heard you guys were here and I wanted to stop by and say hi because I always stop by places and say hi to people even when they don’t invite me to.
Us: Cool, but could you take it easy it on all our Tuna Crudo?
Us: You’re the one interrupting our dinner. Is there something we can help you with, other than the Tuna?
Him: (Deafening silence except the smacking sounds of raw tuna being voraciously chewed.)
Us: This is getting awkward. You should probably be leaving now. And seriously, lay off that Crudo.
And so he shuffled out, went to his car, logged onto his CruchPad thingy, and banged out this tinfoil-hat blog nonsense about our being some kind of benevolent evil-doing organization of rich dudes hell-bent on ruling the Earth through Y Combinators and unfair Groupon investing practices or whatever.
All we wanted to do was have some wine, eat the apps we ordered, and go on our merry ways making billions and billions of dollars within the byzantine self-sustaining system of insular wealth we worked so hard together to create.
So the punchline to this whole joke of a scandal is: bloggers are dicks, and will steal your food.
Now that is classy, fun, sort of fictional journalism. I’m loving it.