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TechCrunch Accuses Tech Investors of Collusion

TechCrunch's Michael Arrington last night blogged about crashing a dinner meeting that involved at least 10 of Silicon Valley's biggest angel investors. Arrington was tipped off about the "super angels" meeting at San Francisco's Bin 38 and told not to come because he would not be welcome. Despite his source's warning, Michael went along anyway. To say he was surprised by what he found is an understatement.

Arrgington says he walked into the restaurant and saw 10 or more of the Valley's biggest angel investors. He says he knew every person in the room "very, very well" and expected to be asked to sit down and share a drink before "being shooed off while they talked about whatever they thought should be kept off record." That is not what happened.

Michael says he was greeted by cold silence, and couldn't get a friendly greeting out of anyone, never mind an invitation to join them for a pre-dinner drink. Arrington left, tweeted about how weird it was (of course), and wrote that he'd never seen a group of more guilty looking people.

Arrington later rang around and spoke to several people in attendance at the dinner in Bin 38. Mike cites these people as saying the meeting was just one in a series of regular meetings held by this group of investors. Though the tradition started innocently enough (they apparently mostly met up to complain), the TechCrunch founder says it has quickly evolved into a game of collusion and price fixing. Mike's sources say that though they are uneasy with the meetings and only go to gather information, these dinners include talk of how to keep prices down.

Arrington's post has made a big splash and considering his description of the people in the room ("10 or so of the highest profile angel investors in Silicon Valley"), it's not hard to arrive at names for a couple of likely attendees. However, at least one investor in attendance has dubbed the TechCrunch story "horseshit," and "bullshit," as well as stating that Mike is, "dead fucking wrong" about there being a collusion scandal.

Dave McClure of 500 Investors writes:

"- 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."

McClure goes on to admit that start-ups and investors "bitch and moan about price/valuation" all day long but is adamant that it's nothing more sinister than that and insists that most of the conversation at dinner was very mundane. McClure is not alone in his claims that nothing untoward is going on. Fred Wilson of Union Square Ventures says that though he wasn't there, he doesn't believe anything is going on either.

"[In the angel/seed market] Deals are widely syndicated and it is common for everyone who is interested in a given deal to get into it. In that kind of market, collusion is entirely possible.

Michael Arrington has yet to comment on either of blog posts above.

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