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Investors Weigh in on Meetings

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Update 2: This story is getting more and more interesting. See these reactions from Ron Conway and McClure, as well as this post by Robert Scoble

Update: VC and founding partner at 500 Startups, Dave McClure, has written a colorful response to Arrington’s claims. Here’s an excerpt:

mike arrington is a friend, an imposing figure, and a hard-nosed, hard-working journalist. that said, he’s dead fucking wrong about there being some story around " collusion" (def’n). makes for great red meat on TechMeme & Twitter, but it’s just so much horseshit.

yesterday i was invited to a dinner with some well-known startup investors to discuss the latest & greatest in tech & startups. the agenda was drinks, good food, & shooting the shit… it wasn’t to collude, to price fix, to put out a hit on Paul Graham, or generally bust a cap in any founder’s ass (ok maybe Zuck & Jobs have it coming, but people might notice if we shoved them furtively into Davy Jones’ Locker). Yes: it was a private affair, and No: mike wasn’t invited. neither was Barack Obama, your mom, nor any of 500 other friggin’ awesome people in silicon valley or around the world.  meh… whatever — i don’t get to go to every cool kid party in the valley either.  sorry, mike… but if you want, i’ll knock one back with you before we go onstage Monday morning at Disrupt.

We can only assume Arrington is crafting his response to this. 

Original Article: Michael Arrington at TechCrunch has caused a stir, claiming he went to a bar and found a "secret meeting" taking place with a group of "Super Angels", which he does not name, but says "together account for nearly 100% of early stage startup deals in Silicon Valley."

While he didn’t hang around for the meeting, he says he spoke with three people that were in it, some of which were "uncomfortable" with what was being discussed. The discussion, according to Arrington’s account of it, included "complaints about Y Combinator’s growing power", "how to counteract competitiveness in Y Combinator deals", complaints about rising deal valuations and acting as a group to drive them down, and keep out new angel investors and venture capitalists – basically eliminating competition. 

Obviously, this kind of thing is frowned upon, and these are big allegations against a group of people Arrington calls "friends".

Fred WilsonSome appear to be skeptical of the whole thing, however. Well-known VC Fred Wilson says, "It’s the kind of blog post that Mike has become famous for. It’s a good read and even if it is partially true, it’s a slap in the face of the individuals involved."

"The very fact that some of the most active and respected angels in silicon valley were meeting to discuss the changing dynamic of their business suggests to me that the opposite is happening," he says. "I suspect that the good old days when they could all get together and do a deal are gone. And they are not happy about what they see happening to their market. I wasn’t at the meeting and I don’t know for sure what was discussed. But I know most of these investors and I know what is on their minds right now."

Others are applauding the exposure of such a meeting. Even Wilson says he applauds Arrington for bringing up the subject. Arrington says after speaking to an attorney, he has confirmed that the laws that exist were designed to protect against the very types of meetings that he discusses.

 

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