At first I thought it best to completely stay away from this story, then I realized after a conversation in our office tonight that there are some interesting details in this story that may make sense for me to collect and reflect on. This is a collection of the posts on the AngelGate drama going around in the venture financing world. If you read the following articles in order, and some of my personal insights provided below, you’ll understand what’s going on and  have a great understanding of the topic from multiple, differing, but all intelligent perspectives.

Format is:

Name of author (sentence summary)

My insight/review, blah blah blah.

Enjoy.

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TechCrunch (this is where it all started)

Mike Arrington of TechCrunch, went to a dinner with some super angels, meaning people who invest early stage, but with other peoples money (some definitions may vary). Arrington was tipped off on the dinner and had a hunch that it was about price collusion in early stage deals. So, he just showed up in typical hard nosed journalistic fashion…

http://techcrunch.com/2010/09/21/so-a-blogger-walks-into-a-bar/

Dave McClure (we’re not bad, we’re hustling & a healthy fuck you)

Dave’s approach is consistent and honestly I kinda like it. He basically makes the claim that these meeting happen but no, they weren’t colluding on prices. They generally meet with some of the big names to make good things happen and help direct the industry in a positive direction.

http://500hats.typepad.com/500blogs/2010/09/fire-in-the-valley.html

Ron Conway (blasting super angels)

Ron is a stand up angel and I hope someday I get the chance to work with him. This letter (that was intended to be private) got out and of course published on TechCrunch. He basically calls out some negative super angel behavior and attempts to disassociate with the crew that is potentially acting in an unethical fashion. If there’s anything I took away from this, it’s that some nasty things were going down around that table.

http://techcrunch.com/2010/09/23/ron-conway-angel-email/

Brenden Mulligan (can’t we all just get along)

This post is probably the least circled of all the posts here. However, its one of the most honest and innocent summaries that I’ve seen and I have a huge amount of respect for it. Brenden is a good friend and he literally nailed this one. If I were to write a post with my thoughts, I’d probably just ask to repost his. The gist is chill out, we all need each other.

http://bmull.com/dont-let-this-angelgate-crap-drag-out-communi

Mark Suster (reality sets in, advice for entrepreneur)

Like I posted on Marks blog tonight… Every time I have an interaction with Mark, whether twitter, or reading his blog, I have a growing respect for his perspective and realistic, balanced approach to business and life. This is the best response yet to a very sticky but interesting topic. It’s fair, it’s real, and it like most things I agree with, sides a bit with the entrepreneur about how to handle what is inevitably the real world. His advice is a little bit deal with it, and a little bit, how to deal with it. Thanks Mark.

http://www.bothsidesofthetable.com/2010/09/23/what-entrepreneurs-should-do-about-price-fixing/

What I’d like to see more of in Chicago is…

1) VC’s and Angels who blog – so that they communicate what is interesting to them and so that they are more accessible or even appear more accessible to the areas entrepreneurs.

2) An increase in the understanding that failure won’t kill you – in the Valley, as well as in NYC, people understand that successful businesses often come from trial and error. Here in Chicago, with the strong industrial goods trading culture, failure is BAD. We need to get over that.

3) Midwest cities need to stop fighting for control – none of you are as big as the hubs (SF & NYC) so work together so that you can pull resources to create a single, strong, job pool and start to create really solid companies.

Next week I’m speaking in Milwaukee about a startup that I started and how/why it failed. That’s my first step.

The reason why I’d like to see more of these 3 things is because from what I’ve seen through the people that I’ve talked to here in Chicago, there is absolutely no reason that Chicago shouldn’t have as strong of a startup culture as any other ecosystem outside the Valley (like NYC or Boulder). People always ask the question, “can you start a successful tech company or web company outside of Silicon Valley?”

Hell yes. Here’s why.

All huge companies with extremely large exits. Here are some other reasons.

Two awesome Venture Capitalists wrote about this topic back in July 09. Fred Wilson (who made this list of companies) argues that it’s a ‘crock of shit’ to think that great tech companies can’t start outside the Valley. And Matt McCall talks about the higher deal valuations in the Valley, hyper-competition, and other factors, that actually hurt entrepreneurs.

I completely agree with Matt and Fred’s point of view on this topic. Which is why my mind immediately wanders to the question, “What’s the solution?”. So these 3 issues serve as my proposed solution, but I can’t do it alone.

We need Chicago’s tech & entrepreneurial & investor folks to understand our challenges and act to fix them! There is no reason that a failed venture should be such a huge negative, other companies should be chomping at the bit to retain your experience within their companies. Out in the Valley it’s almost encouraged to try and fail or at least easier to explain and embrace. Starting a startup and not being successful is all part of the process to starting a startup and being successful!

We desperately need more VC’s and Angel investors like Matt and Fred, accessible and blogging, talking about the challenges from both an investment perspective and a entrepreneurial perspective. We need to close the gap between money and entrepreneurs with ideas and businesses. Chicago VC’s need to start giving talks and attending entrepreneur meetups and events. Be in the community and help foster it.

Hey Milwaukee folks, I lived their and enjoyed my time there, but you have to stop having younger brother syndrome toward the Chi. There is an incredible community of creative talent in Milwaukee and Chicago companies should be tapping that pool. This day and age employees don’t have to be in the office 5 days a week so jump on the train and get down here 2 or 3 times and lets work together to build a strong Midwest startup culture. Also, don’t give me this bunk about universities. Mark Andreeson went to U of I and so did Max Levchin, there are brilliant technologists in this area, just give them a reason to stay.

image via sergilvs

Lots of schools have similar programs already.  They just don’t have huge companies.MSOE will pay for your patents, and still rarely anyone takes them up on it.

Why?

Students aren’t fundamentally trained to think about growing a business using their engineering skills.  Initiatives like KEEN aim to change that.

We’ve actually laid a much better framework for the future, but it’s hard to see the benefits in the short run.

We should talk more about the culture that creates this at some point.  There are all kinds of startups around Stanford, so they in turn have students creating new businesses.  The chicken creates the egg, and the egg creates the chicken.  At MSOE (again an example I use because I go there), we’re working hard to create the chicken so that it can create eggs simply by being associated with the school.  A culture of entrepreneurship.

If you go south of the border to IIT (not to be confused with ITT).  They’re a mile down the road already and creating lots of businesses.  Their culture is inspiring MSOE students though.  Cooperation between the schools has been great so far.

What we need in the MKE/CHI corridor is one big win.  Doesn’t even have to be Google sized, but something that really gets the idea going in people’s heads.  Programs like KEEN are already helping to bridge the gaps between institutions so everyone doesn’t need a chicken to get eggs.

A side effect of a successful startup in a city is more startups.  We just need that successful startup.

Originally posted as a comment by Jeramey Jannene on Ryan A Graves.com using Disqus.

Students create interesting idea using university resources. Students create a company and have an exclusive license to use the technology, which they made at their institution. Institution gets bragging rights and extra revenue for the school. For an entrepreneur to promise a large amount of ROI to their university, without even knowing what to promise, I’m not surprised that Marc Andreesen went west.  –from Chicago Tech Report

I have two thoughts on this.

1) Why don’t more schools have this structure set up for companies that are started at the university?

This credibility that Standford gets, especially with a company like Google is huge. Other schools with awesome technology programs like University of Illinois and also University of Wisconsin (Madison) should definitely be taking advantage of this opportunity. A few weeks back Eric Olson wrote about the Midwest brain drain. This is a great opportunity to combat that problem. Here’s what you do, stop the drain even before it becomes a leak, it’s as simple as providing a better opportunity and a better chance for success! That’s the question all ‘smart’ entrepreneurs are asking themselves, what position do I have to put my company in to have a better shot at success? The best position for web startups is still either Silicon Valley or NYC but that could change with the increasing number of VC’s in the midwest and hopefully an increase in investment from universities.

2) Would this structure be a deterrent for entrepreneurs at a university program?

The argument here would be, why would I want to give the university a guaranteed piece of the pie? I’ll tell you why, this model is proven. It’s the same decision a company has to make when taking VC money. We give you a portion of our equity and you give us resources. Sometimes those resources come in the form of cash, sometimes in the form of coaching or advice from a board member. Either way, the return that a company gets from taking VC money and having the opportunity to grow, or taking university resources and having the opportunity to start is usually well worth it.

So, Stanford owns Google. Who does Harvard, U of I, UC Berkley, UW Madison, MIT, Carnegie Mellon, or CalTech own?