• TechCrunch, Wednesday, September 22, 2010 10:49 AM

So, TechCrunch's Michael Arrington claims to have uncovered a clandestine cabal of venture capitalists involved in collusion and price-fixing. Several members apparently even told him how they hold down the valuations assigned to early-stage companies; how to block VCs from investing in companies that outgrow the cabal; and how to undermine startup incubator Y Combinator, which invests very small amounts in ideas deemed too underdeveloped for angel funding. "This isn't minor league stuff," says Arrington. "We're talking about federal crimes and civil prosecutions if in fact that's what they're doing."

For its part, Gawker thinks that the "conspiracy's hapless incompetence is actually rather comical. "It's hard to get too worried about these guys given their total inability to keep their big secret conspiracy at all under wraps. Not only did someone privy to the scheme leak the exact location of the group meeting, a public wine bar (!) and restaurant, to the publisher of TechCrunch, but several members of the cabal dished the group's darkest 'secrets' to Arrington after the conspiracy meeting took place." Still, "The cabal's most comical trait has to be its policy on taking notes. It seems notes are very much encouraged -- so much so, one participant tells Arrington, that 'there is a wiki of some sort that the group has that explicitly talks about how the group should act as one to keep deal valuations down.'"

Read the whole story at TechCrunch »