TechCrunch founder Michael Arrington accused a group of “super angel” investors of collusion and price fixing in a post Tuesday night.
Arrington claims that he walked into a “secret meeting” of around ten investors responsible for nearly all of the early stage startup ventures in Silicon Valley who were pooling their resources to muscle traditional venture capitalists out of early stage deals, keep new angel investors out of the market, and combat the growing influence of startup incubator Y Combinator.
Arrington says he knows all the angel investors personally, and did not name names. Collusion and price fixing are very illegal forms of anti-competitive behavior. Penalties include jail time.
The “Godfather style” meeting (Arrington’s words) took place at Bin 38 in San Francisco and immediately shut down upon Arrington’s arrival. However he says he was able to talk to several participants after the fact, and their agenda allegedly included:
- 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.