There were high expectations among attendees at TechCrunch Disrupt that last week’s “AngelGate” would come to a head today. But on a panel with many of the principal players and in the hallways of the conference, so-called super angels were eager to ignore the fact that their dirty laundry had been made public. They all now seem to be chanting the mantra that the focus should return to startups, entrepreneurs and innovation.
TechCrunch founder Michael Arrington seemed to have recovered from his righteous anger and now wants everyone to be friends. Last week he suggested that “federal crimes and civil prosecutions” would be in store for those involved, but today he said rather uncharacteristically that he didn’t want his conference to be overrun with controversy. “We’re not going to have a Jerry Springer moment here,” Arrington said at the beginning of a panel that included Ron Conway, Dave McClure and Chris Sacca, all of whose private correspondence about AngelGate has been made public, primarily on TechCrunch.
To summarize: Arrington started the brouhaha by accusing unnamed angel investors of collusion to control the terms of startup funding deals based on popping in on them at a dinner he was not invited to. At first McClure seemed to be taking the fall for AngelGate as one of the only angels to admit publicly he was at the dinner (and another previous one). Conway called McClure “classless” for his participation and his defensive blog post justifying the dinner. Then after declaring himself out of the fray, Conway backtracked to defend his SV Angel partner David Lee, who had attended the dinners in question. Nobody came out of the situation looking very good.
On stage, Conway and McClure (who sat next to each other) clashed on a number of topics about early stage investing. Conway said he “completely disagree[s]” with the practice of founders of a company “taking money off the table” by selling shares to late-stage investors. “I think that a company consists of every single person on the team. Every one of those people should cash out at the same time.” McClure replied, “That’s not practical.”
Later Conway gave a bit of a speech about how “super angels” are really just small VCs, and repeatedly asked McClure — who was interrupting him to disagree — “Will you let me finish.”
Arrington, for his part, pointed out that Sequoia Capital (whose partner Roelof Botha was also on the panel) has accounted for some $12 billion worth of exits in the past two years, an amount that outweighs the value of the super angel ecosystem. The most cutting thing he said about angels was “there’s a cult of personality developing in the angel industry that’s starting to drive me a little bit nuts.”
McClure told me after the panel that he felt like it was “up to Ron” whether the two men would return to friendly relations. He maintained that there has been no real fall-out from the public airing of grievances, that as far as he knows the government is not investigating the situation, and that he’s signed seven new funding deals in the past week. Attendees I spoke with afterwards as well as participants on the panel, including Sacca and Mark Suster, complained that the experience was awkward and frustrating — and not informative.
What seems to have happened is everyone is realizing that AngelGate made them all look bad. For everyone involved, personal brand and reputation are everything — angels and tech blogs have only recently come to prominence as primary forces behind cheaply built web startups that are changing the world. And there are plenty of people with money who would be happy to take their place. There’s no lack of startup funding right now. Already at the conference today Greylock Partners and Founders Fund announced two new initiatives to fund early stage startups, with Greylock committing $20 million to seed-stage investments and Peter Thiel offering up to $100,000 to 20 companies started by people under 20 years old. The more squabbling the super angels do, the less they will get to participate.
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