In a blog post that is already making waves in Silicon Valley and throughout the startup community, Mike Arrington says that he recently walked into a secret meeting of the Valley’s so-called “super-angels.” Those are the trendy, not-quite-VCs who invest smaller amounts of money in startups, and who like to make themselves out to be an entrepreneur’s best friend — the kind that knows what entrepreneurs are going through and share their pain by not charging huge fees, etc. Except, according to Arrington, things aren’t always what they seem.
The point behind this meeting, the TechCrunch founder says, was to talk about how the super-angels (some of whom may appear on these lists) could consolidate their power within the Valley ecosystem and win more market share away from the traditional Sand Hill Road VC firms. And are they planning to do this by offering better service to the entrepreneurs whose pain they claim to share? Not according to some of those in attendance at the meeting, who said that the topics discussed included how to blunt the competitive force of YCombinator, how to keep valuations down and how to convince startups not to use convertible notes for financings.
If these reports are true, that doesn’t sound very super at all. In fact, it sounds just like the traditional VC mentality that super-angels were supposed to be fighting against — the win-at-any-cost, anything-is-fine-if-I-get-my-cut attitude that startups have been up against for decades. What happened to the “sharing your pain” approach? What happened to the “act like a startup” motto that some have advocated?
This latest development, if true, is the continuation of a perverse trend in which everyone chooses to focus on the investors instead of on startups and what is good for them. After all, the entrepreneur is supposed to be the one at the heart of this whole process — who is looking out for his or her interests? No one, it seems. It’s ironic that the movie “Wall Street 2” is going to be opening in theatres soon, and the atmosphere in the VC world seems to be very much like the one that Gordon Gekko raved about in the original.
Everyone knows the VC game is tough, even for super angels — especially when hundreds of them throng to a YCombinator event to see just a handful of promising startups. No one thinks it should just be one big Kumbaya singalong, by any means. But it’s one thing to run a business and another to be advocating that everyone gang up to drive valuations down, or to stop the use of convertible notes — which are a startup-friendly trend that many non-super angels and startup advisors have been promoting. It’s a little sad to hear that some of the same people who have been saying publicly that they were on the side of startups may be saying something completely different in private.
The last time professional investors spent so much time thinking about what they were getting out of the deal rather than focusing in building a healthy startup community, it was the late 1990s, and it didn’t end well. If the super-angels and traditional VCs alike spent a bit more time thinking about the entrepreneurs at the heart of this whole equation and a little less thinking about ways to line their own pockets at his or her expense, we would probably all be a lot better off.
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