AngelGate Is “100 Percent Accurate,” Says Michael Arrington

Last night, TechCrunch’s Michael Arrington reported that on Monday night, a group of high-profile Silicon Valley angels met at a San Francisco restaurant, where, Arrington said he later learned, “collusion” and “price fixing” were on the menu.

The story has been refuted by at least one angel who was at the dinner, but Arrington told me his blog post was “100 percent accurate.”

And the story is being taken seriously enough that, according to one source, law firm Wilson Sonsini sent out a note this morning, advising recipients that if they had clients who were in attendance at Monday night’s dinner, they’d be hearing from the FBI this morning.

Arrington declined to say if he had been contacted by law enforcement officials.

In the TechCrunch post, Arrington said that after the meeting two participants told him that the group discussed the growing power of the Y Combinator program, how to combat rising valuations as a group, and how the participants might better keep VCs out of deals entirely.

Such dark claims have been dismissed by angel Dave McClure, who said he was at the dinner and wrote about it on his blog. McClure said that the dinner conversations were just “kvetching” among friends. For good measure, he added that any suggestion the group was colluding is “so much horseshit.”

Another angel with knowledge of the dinners — which have been recurrent and are attended by different angels each time — told me earlier today that Arrington’s claims are slanderous. Yes, this person said, valuations have gone up and it’s a pain for angels, but the dinners are purely networking get-togethers for friends in the same industry to vent and share what they are observing.

“It’s not like there’s [a formal] organization for angels [akin to the NVCA],” said this person. As such, it’s up to interested angels to organize meetings to talk about issues in their fast-changing — and growing — industry. Indeed, he says, the same kind of networking takes place at conferences including the Lobby, D or at Y Combinator Demo Days, he said.

The angels come together “not because we think we’re the best or we’re elitist,” but because they know one another, including, in many cases, in their past lives as entrepreneurs, this person added.

In the meantime, Arrington, who was an attorney before he became a tech blogger, is sticking to his story. When I asked him earlier today if he worried that he’d applied overly powerful language to a situation into which he didn’t have clear visibility, he said, “No, the story is 100 percent accurate. Two different people called me [after the dinner] and I called one person.”

The two sources who called Arrington, “called to apologize for not talking to me while I was there, then they launched into how it was weird, and how, ‘personally I wish I wasn’t even there.’”

I asked Arrington if his sources might have casually thrown their friends under the bus in an effort to assuage him. He answered, “No. I create awkward situations, almost on purpose. [Walking into the dinner] was definitely weird, even for me. But I wasn’t offended in any way,” he said. In fact, said Arrington, “One of the guys who talked to me said, ‘Can you imagine John Doerr and Mike Moritz having dinner together to talk about deal terms and valuations?’”

Only McClure and Bryce Roberts of O’Reilly AlphaTech Ventures have said publicly that they were there.

Asked about McClure’s post, Arrington said that before McClure posted about the event early this morning, he called Arrington to let him know as a “heads up.” Arrington said that McClure told him, “’It’s not that your blog post was wrong, but that’s not why I was there.’”

Said Arrington: “It’s interesting in [McClure’s] post. … He calls it a big innocent gathering [but] the other thing Dave wrote was he admitted [they had discussed] pricing and funding.”

He added, “Just the fact that they talked about it — they don’t think that’s wrong.”

“Valleywag got it right today when they called the whole thing hapless,” said Arrington.

“It’s not clear that [the gathered investors] knew what they were doing was wrong,” he said. “They didn’t come up with a game plan. But just talking about this stuff is hugely illegal.”

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8 Comments

  • Good article you wrote, instead of reading 5 blog posts I just read yours :)

    Anyway, I think that someones feelings got hurt and they went into defensive mode.

    It’s like you not being invited to party, and you call police to say “At this house there are minors who drink”

  • Ok this makes a lot of sense dude.

    Lou
    http://www.web-anonymity.tk

  • ‘Can you imagine John Doerr and Mike Moritz having dinner together to talk about deal terms and valuations?’

    Yes, attend any VC conference with panel sessions. There is no dinner, and the conversation is quasi-public, but the end result is the same…

  • Connie: please don’t attribute 3rd-party quotes from Arrington to me without confirmation. as far as i know, you didn’t attempt to contact me to verify.

    him confirming his own story isn’t a second source, that’s just him re-reporting is own story. his quotes about me are self-serving and inaccurate.

    reporting 3rd-party commentary and second-hand rumor is not reputable journalism.

  • [...] fix prices in the start up world – which is super illegal and immoral. PEHub Wire has a good follow-up article. What do you think? Were these guys doing something illegal? Or just ‘bitching’ about [...]

  • [...] investors accused of price-fixing by Arrington, that they might be approached by the FBI.  PeHub claims close sources have told them that law firm Wilson Sonsini Goodrich & Rosati has sent out [...]

  • [...] PEHub: AngelGate Is 100 Percent Accurate, Says Michael Arrington [...]

  • [...] Arrington’s Angels: TechCrunch Founder Defends Tale Of “Collusion” AngelGate, Michael Arrington, PEHub, pre-launch, TechCrunch It’s not clear that [the gathered investors] knew what they were doing was wrong,” he said. “They didn’t come up with a game plan. But just talking about this stuff is hugely illegal.” via pehub.com [...]

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