In an overcrowded world of mortal human beings, struggling with scarcity and inequities, networked technology can extend the reach and vision of any of us individually – beyond the wildest dreams of most of human history. The Internet is a great source of hope.

Enter Angel Investors. They give money, usually their own from previous business successes, to early stage startup companies aiming to create the future of the Internet. They enable inventors to quit their jobs and to build their technologies without immediately worrying about revenue. If there’s trouble among the Angels, then the entrepreneurs they help fund and mentor face trouble in their efforts to build the future of the internet that we will all benefit from. Michael Arrington’s report of collusion among Silicon Valley Super Angels really is as epic a story as it seems – and if the allegations are true, the consequences could affect everyone in the world.

This weekend tech blogger Michael Arrington reported on a secret dinner attended by a large number of Super Angel investors, some of the most prominent early-stage investors in consumer web technology. Uneasy participants at the event later told Arrington what the topics of conversations have been at prior meetings and it appears they could constitute illegal price fixing and collusion. Collaboration to take greater control for these investors and less for other investors they compete with and the entrepreneurs they invest in. That’s what it comes down to, if the allegations are accurate.

That’s contrary to the interests of the inventor entrepreneurs that those Super Angels are charged with shepherding into the world.

Why Should You Care?

Why should you care? Because the Internet has changed your life, and we’re only at the very beginning. And each new innovation needs financial support.

World leaders used to have to ride a horse for days to visit a library that held less information than we can all now access in moments with an inexpensive device we carry in our pockets. Angels funded the early development of the systems that made that possible. Ron Conway, now the most prominent Angel investor in tech, was an early investor in Google. Humanity is fortunate that Google’s early investors like Conway didn’t sabotage its development out of short-term self-interest.

Anyone can now publish text, photos, audio or video, live in real-time even, to any number of people all around the world. Those publishing tools were born in part thanks to the money of Angels, who helped them become real and popular before worrying about how to make money from a communications revolution.

The otherwise unknown people around the world who use free blogs to expose the injustices committed by authoritarian governments? Those people are fortunate that when O’Reilly invested ten years ago in Pyra Labs, the company that made, that backing didn’t come at the expense of Pyra’s ability to innovate.

Aggregate activity of all these systems can now be analyzed to capture everything from real-time global self-awareness to instant personalization that would have been unimaginable in all but very recent history.

The next step will be machines talking to machines talking to the internet – your refrigerator will be your next friend on Facebook and its newsfeed will update when it has trouble using electricity efficiently or no longer contains a carton of eggs. More importantly, city streets will report to the web about what happens on them, inequitable delivery of public services to different populations will become clear as day when all the data is online and the illumination of new problems will foster the creation of new solutions.

Entrepreneurs will build those systems, and Angels will fund their doing so.

So it’s very important that Angel Investors not act contrary to the interests of the entrepreneurs building the future. Because the rest of us all want that future to be developed as well as possible.

Not all important innovation comes from Silicon Valley, or is invested in by Valley Super Angels – but that is the case for a lot of it.

That’s why the story of AngleGate is a story of alleged injustice being done not just to competitors of these particular investors, or the startups that seek their funding. It’s a story about Super Angels acting against the interests of anyone whose life might be touched by the future of the Internet.

Photo by Joi Ito.